Case: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 1 of 55



### INTIIE UNITED STATES COURT OF APPEALS FORTIIENINlli CIRCUIT

THE CITY OF SANTA MONICA,

v. FEDERAL AVIATION ADMINISTRATION, Petitioner,

**No.---~**


### Respondent.

PETITION FORREVIEW
Pursuant to 49 U.S.C. 

### §46110 and Rule 15(a) of the Federal Rules of Appellate Procedure, the City of Santa Monica, a municipal corporation duly chartered under the Constitution ofthe State of California, hereby petitions the United States Court ofAppeals for the Ninth Circuit for review ofan order issued by Respondent Federal Aviation Administration ("FAA"). Specifically, the City seeks review ofthe Final Agency Decision and Order entered on August 15, 2016, and issued by the FAA in 

### National Business AviationAssociation, et al., v. City of Santa Monica, FAA Docket No. 16-14-04. A copy ofthe Final Agency Decision and Order, along with the underlying Director's Determination it affirmed, is attached hereto.

### Case: 16-72827, 08/25/2016, ID: 

### 10100384, DktEntry: 

### 1-5, Page 2 of 55

Dated: August25, 2016

MARSHA JONES MOUTRJE 

### CityAttorney JOSEPH LAWRENCE 

### Assistant CityAttorney LANCES. GAMS IVAN CAMPBELL 

### Deputy CityAttorneys 1685 Main Street, Room 310 SantaMonica, California 90401-3295 Telephone: (310) 458-8336

2 Respectfully submitted,


## Is/Deanne E. Maynard DEANNE

### E. MAYNARD G. BRlAN BUSEY MORRJSON 

### & FOERSTERLLP 

### 2000 PennsylvaniaAvenue, NW Washington, DC 20006 Telephone: (202) 887-8740 DMaynard@mofo.com
ZANE 0. GRESHAM JAMES 

### R. SIGEL MORRJSON 

### & FOERSTERLLP 

### 425 Market Street SanFrancisco, CA 94105 WILLIAMV. O'CONNOR, JR. MORRJSON 

### & FOERSTERLLP 

### 12531 High BluffDrive, Suite 100 SanDiego, CA 92130 

### Counsel forPetitioner City of Santa MonicaCase: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 3 of 55



## EXHffiiT 1 Final AgencyDecision and Order,NationalBusinessAviationAssociation, etal. v. City of Santa Monica, FAADocketNo. 16-14-04 (Aug. 15, 2016)Case: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 4 of 55

U.S. Department of T ronsportaffon Federal Aviation Administration August 15,2016
Richard K. Simon 1700 Decker School Lane Malibu, CA 90265 G. BrianBusey Paul Varnado James Sigel Morrison & Foerster LLP 2000 Pennsylvania Avenue, NW Washington, DC 20006

Re: DocketNo. 16-14-04 Dear Counsel: OffiCe ofAirport Compliance and Management Analysis 800 Independence Ave., SW. Washington, DC 20591

MarshaJones Moutrie Joseph Lawrence Lance S. Gams Ivan Campbell SantaMonica City Attorney's Office 1685 Main Street, Room 310 Santa Monica, CA 90401 Zane 

### 0. Gresham Morrison & Foerster LLP 425 Market Street San Francisco, CA 94105

Enclosed is a copy ofthe final decision and order ofthe Federal Aviation Administration (FAA) with respect tothe above-referenced matter. The FAA Associate Administrator for Airports affirms the Director's Determination, and concludes thatthe Director's analysis and conclusions are supported by a preponderance ofreliable, probative, and substantial evidence, and is consistent with applicable law, precedent, and FAApolicy. The reasons for upholdingtbe Director's Deterrn.ination are set forth inthe enclosed fmal agency decision. Sincerely,



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# KeVJ~C. Willis Acti g Director, Office ofAirport Compliance and anagement EnclosureCase: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 5 of 55 

### CERTIFICATE OF SERVICE I HEREBY CERTIFYthat on August 15, 2016, I caused to be emailed andplaced in

### the United States mail (first class mail, postage paid) atrue copy ofthe Final Agency Decision, to: FORCOMPLAINANT 

### Richard K. 

### Simon 1700 Decker School Lane Malibu, CA 90265 rsimon3@verizon.net FOR RESPONDENT 

### Marsha Jones Moutrie Joseph Lawrence LanceS. Gams Ivan Campbell Santa Monica City Attorney's Office 1685 Main Street, Room 310 SantaMonica, CA 90401 Marsha.moutrie@smgov.net G. Brian Busey Paul Varnado James Sigel Morrison & 

### FoersterLLP 2000 Pellllilylvania Avenue, NW Washington, DC 20006 

### gbusey@mofo.com Zane 0. 

### Gresham Morrison & 

### FoersterLLP 4

25 

### Market Street San Francisco, CA 94105 zgresham@mofo.com Copyto: FAA Part 16 Airport Proceedings Docket FAA

### Airport Compliance and Management Analysis, AC0-100 

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# A<::..- 

# L- ,**'ll/Lru~** 

## ' ' ·nthia L 

### Powe l Administrative Officer Office ofAirport Compliance and Management AnalysisCase: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 6 of 55 

### UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAl AVIATION ADMINISTRATION WASHINGTON, DC

National Business Aviation Association, KruegerAviation, Inc., Harrison Ford, JusticeAviation, Kim Davidson Aviation, Inc., Aero Film, Youri Bujko, James Ross, Wonderful Citrus LLC and Aircraft Owners and Pilots Association 

### Docket No. 16-14-04
Complainants 

# v. City ofSantaMonica, California Respondent


### ASSOCIATE ADMINISTRATOR FOR AIRPORTS FINAl AGENCY DECISION I. INTRODUCTION This matteris before the Federal Aviation Administration (FAA) Associate Administrator

### tor Airports on appeal filed by City ofSanta Monica, California, (City/Respondent) owner, sponsor, and operator ofthe Santa MonicaAirport (SMO). The City appeals the Director's Determination ofDecember 4, 2015 issued by the Director ofthe FAA Office ofAirport Compliance and Management Analysis, pursuant to the 

### Rules of Practicefor FederallyAssistedAirportEnforcement Proceedings found in Title 14 Code of Federal Regulations (C.P.R.) Part 16. OnAppeal, the City asserts thatthe Director erred inhis analysis and the Director's Determination must be reversed, andcontends that its Airport Improvement Program (AlP) grant assurance obligations expired in 2014. [fAA Item 22, pages 10 and 33]. The Complainants filed a Reply to the City's Appeal and argue that "the City's appeal and accompanying petition should be denied and the Director's Determination should be affirmed, includingthe finding therein that the City is obligated by the Grant Assurances through August 27, 2023." [FAA Item 24, page 15]. The Associate Administrator onappeal considers issues accepted in the Director's Determination using the following analysis: (1) Are the findings offact each supportedby a preponderance ofreliable, probative, and substantial evidence contained in the record; (2) Are conclusions made in accordance with Jaw, precedent andpolicy; (3) Are the questions on appeal substantial; and (4) Have any prejudicial errors occurred. [14 C.F.R. § 16.33(e)].

15 August 2016 Page 1. Case: 16-7/R/7, 08/75/2016 ID· .101pi03R4, DktEntr\1: 1-5, Pag,e 7 8155 Nottonal Bustness Atrcrarfi\ssoctafion, efa! v. Cify o !>anla Momca, Ca!Tfornta [t"AA ocket No. 16-14-04) ln arriving at a final decision onthis Appeal, the FAA has re-examined therecord, including the Director's Determination, the administrative records supportingtheDirector's Determination, the City's Appeal, andthe Complainants' Reply in light ofapplicable law andpolicy, and which comprises the attached FAA Index ofAdministrativeRecord. Basedonthisreexamination, the FAA concludes thatthe Director's Determination is supported by a preponderance ofreliable, probative, and substantial evidence, and is consistent with applicable law, precedent, and FAA policy. The Associate Administrator finds that the City'sAppeal does not contain persuasive arguments sufficientto reverse any portion ofthe Director's Determination. Accordingly, the Associate Administrator affirms the Director's Determination. 

### II. THE PARTIES AND SUMMARY OFTHE DIRECTOR'S DETERMINATION A. Airport SMO is a public-use airport owned and operatedby the City. SMO serves the role ofa general aviation airport capable ofaccommodating a

**~ide** range ofbusiness and personal aircraft, including corporate and businessjets. The 227-acre airport has approximately 269-based aircraft with approximately 452 average aircraft operations per day. The airport is located in a congested airtraffic area and serves as a reliever airport for Los Angeles International Airport (LAX), whichis located seven miles to the south. FAA records indicate that the planning and development ofSMO hasbeen financed, in part, with funds provided by the FAA underthe Airport Improvement Program (AlP), authorized by the Airport and Airway ImprovementAct of 1982 (AAIA), as amended, Title 49 United States Code (U.S.C.) 

### §47101, et 

### seq. Between 1985 and 2003, SMOreceived approximately $9.7 million inFederal airport development assistance. 1 

### B. Complainants The Complainants include tenants ofSMO and organizations with memberswho are aviation users ofthe airport. The Complainants desire clarification concerningthe expiration date ofSMO's grant assurance obligations as determined bythe FAA. [FAA Item I]. The Complainants, as provided in the Complaint, are: The National Business AviationAssociation, Inc. (NBAA) is a District ofColumbia corporation that represents the interests ofcompanies that operate aircraft. According to theNBAA, its membership includes more than l0,000 companies that operate aireraft in conoection with their business or are otherwise involved in business aviation. These entities can or do utilize SMO including butnotlimitedto Krueger Aviation, Inc. and Kim Davidson Aviation, Inc. Krueger Aviation, Inc. (Krueger) is a California corporation engaged in the sale and brokerage ofaircraft at SMO, where it bas been a tenant for more than 40 years. Krueger currently occupies approximately 10,000 feet ofoffice and hangar space ontwo acres that it leases from the City onthe south sideofSMO. It leases office and hangar space to seven sub-tenant businesses andmaintains tie-down space for approximatel.y 30 aircraft. Harrison Ford is an actor, businessman, and pilot. He has been a SMO tenant for 10 years, basing both fixed-wing (piston andjet) and rotor aircraftin his north-side hangar. Mr. Ford bas testified

1 The Associate Administrator is not oddresstng anysurplus property oblfgations since these iypes of obUgotion are nof ot issue in this cose.

15 August 2016 Page2. Case: 16-72827, 08/25/2016, ID: 10100384. DktEntr.Y: 1-5, Pa,ae 8 of 55 Nat1onal Business A1rcraft Association, et al v. Cify olSanfa M"omca, c:alrrornia lfAA Docket No. 16-14-04) before Congress as an advocate for general aviation and regularly flies missions in support of humanitarian causes. Justice Aviation, a California corporation, is a full service flight school and aircraft rental facility located on the south side ofSMO. A tenant for 21 years, Justice Aviation currently employs eight flight instructors and maintains between 9 and II aircraft for instruction and rental. Kim DavidsonAviation, Inc., a California corporation, is an FAA certified Repair Station and a factory authorized Cirrus Aircraft service center located on the south side ofSMO. It has been a tenant since 1982, employing a staffof 11. Aero Filmis a California limited liability company engaged in the production oftelevision commercials. 

### Itis based at SMO, where itmaintains offices and a hangar for two aircraft, a Cessna Citation II and an MD 500 helicopter, both ofwhich are used in its business. Aero Film has been a tenant for 11 years. Youri Bujko, a tenant since 2008, is the owner and pilot oftwo aircraft, a Mooney Super M20 E and a Cessna Crusader, which he maintains forboth business and personal use on the south side ofSMO. James Ross is a recreational flyer who owns a Cessna I70, based in tie-down space on the south side of SMO. He has been a tenant for 18 years. Wonderful Citrus, LLC (formerly Paramount Citrus LLCi, together with its affiliates, is the largest vertically integrated citrus business in the United States. ParamountCitrus Aviation, based in Bakersfield, California, is the business department ofthe agricultural based companies owned and operated by Wonderful Citrus LLC and its related entities_ Wonderful Citrus LLC and Paramount Citrus Aviation are jointlyreferred to herein as "Wonderful." Wonderful has been a user ofSMO for more than 10 years, and logs approximately 235 monthlyoperations at SMO in support ofits business operations. Wonderful relies on SMO as a vitai hub for employee travel to multiple destinations across the western United States. The Aircraft Owners and Pilots Association, Inc., (AOPA) is an independent, not-for-profit education and advocacy association incorporated in NewJersey and headquartered in Frederick, Maryland. According to AOPA, 

### it is the world's largest aviation membership association, representing approximately 370,000 pilots who fly for personal and business reasons. Accordingto AOPA, more than 6,000 ofits members are within a 25-mile radius ofthe City, and many ofthose members base their aircraft at SMO, including, but not limited to, Harrison Ford, Youri Bujko and James Ross. AOPA acts as their representative inthis proceeding, consistent with FAAprecedent. 

### See, e.g., BombardierAerospace Corp. v. City of Santa Monica, Docket No. 16-03-I 1, Director's Determination, at I n.l and 22 (January 3, 2005). C. 

### Summary On December4, 2015, theDirector, Office ofAirport Compliance and ManagementAnalysis, determined thatthe Cityremains obligated by the AlP grant assurances until August 27, 2023. The Directorbased this finding on the acceptance ofAIP Grant Amendment No.2 (AmendmentNo.2) on August27, 2003, which resulted in additional AlP funds being providedto the City. The Directorfound that this acceptanceofthe FAA offer ofadditional grantfunds, afterthe projecthad been completed, triggers the

zon January 4, 2016, counsel forthe Complainants filed a Notice ofComplalnanf Nome Updates advtsing that Paramount Citrus LLC has changed to Wonderful Citrus, LLC The caption tothls case has been revised 1o reflect this name change, and to correctly identify NBAA- See FAA Item 23_

15 August 2016 Page3. case: 16-72827, 08/?5/2016, 10· .10100384, DktEntr11: 1-5, PaQ.e 9

# Bf55 Nat1onal Bus1ness Aircra1f7\Ssoclaffon, e!al v. Cify 6l Santa Mon1ca. California [tAA ocRet No. 16-14-04) 

### grant assurances to remain in force for 20 years thereafter, expiring on August 27, 2023. FAA Item 20, page 19]. 

### Ill. PROCEDURAL HISTORY OnJuly 2, 2014, the FAAreceived a Part !6Formal 

### Complaint alleging that the City violated 49 U.S.C. 

### § 47107(a) and airport GrantAssurances. [FAA Item 

### 1}. OnJuly 17, 2014, the FAA issued the 

### Notice of Docketing. [FAA Item 2]. On August 14, 2014, the City filed a

### Motion to Dismiss and on August 28, 2014, the Complainants filed an

### Answer to the Motion to Dismiss. [FAA Items 3 and 4]. On October20, 2014, the City filed its

### Answer and on October 30, 2014, The Complainants filed a 

### Reply to the Respondent'sAnswer to the Complaint. [FAAItems 5 and 6]. OnNovember 11, 2014, the City filed a 

### Rebuttal to the ReplyBrief ofComplainants, and on February 19, 2015, the FAA issued a notice requesting additional information from the parties regarding 

### useful life. [FAA Items 7 and 8]. On March 25,2015, the FAA received information from the Complainants in response to the February 19'h notice requesting additional information. [FAA Item 9]. On April 1, 2015, the FAA · received information from the City based on the February 19, 2015 request. [FAA Item I0]. On August 6, 2015, a 

### Notice of Extension of Time to issue the Director's Determination to August 21, 2015 was issued. [FAA Item 16]. This initial extension was followed by three other extension notices on August 21, September 21, and October 16, 2015. [FAA Items 17, 18, and 19}. On December 4, 2015, the FAA issued the Director's Determination, and on December 23,2015, the City filed a

### Request for Hearing. [FAA Items 20 and 21AJ. 3 

### On January 6, 2016, the Complainants' filed a 

### Reply to City of Santa Monica's Request for Hearing, and on January 8, 2016, the City filed its

### Appeal to the Director's Determination. [FAA Items 21Band 22]. That same day, the City filed its 

### Respondent City of Santa Monica's Petition to Supplement. [FAA Item 22A]. On January 28, 2016, the Complainants filed their 

### Reply of the Complainants to Respondent'sAppeal from the Director's Determination and to

**Respondent~s** 

### Petition to Supplement the RecordonAppeal. [FAA Item 24]. On March 28, 20!6, a 

### Notice ofExtension of Time to issue the Final Agency Decision to June 15, 2016 was issued. [FAA Exhibit 25) This initial extension was followed by two other extension notices on June 22 and August 1, 2016. [FAA Items 26 and 27]. 

### IV. BACKGROUND On January 31, 1984, the Cityand the FAA entered into a Settlement Agreement (!984Agreement) setting forth theterms and conditions under which the City would continue to operate SMO. Underthe Agreement, the City agreed to operate and maintain SMO without derogation ofits use as a reliever airport until July I, 2015. [FAA Item I, Exhibit 5]. The 1984 Agreement, by its terms, did not address obligations after its expiration nor did itrelease the City from its AIP Grant or Surplus Property Act obligations. OnJune 29, 1994, the City applied for and accepted an AlP grant from the FAA for $1,604,700 for planning, airport development, or noise program implementation. (FAA Item 3 Exhibit A, page 2]. The grant was issued in 1994 underAlP Grant No. 3-06-0239-06. The projects underthe grant were completed in two phases, with final inspection in August 1996 (Phase I). [FAA Item 13]. By letterdated August 2, I999, the City asked to amend GrantNo. 3-06-0239-06 to reflect modifications to the original scope ofwork under Phase L The letterindicatedthatthe 

### "request wouldnot result in a

3 The City filed a request for a hearing under 14 C.F.R. Part 16. The Complainants opposed the City's request for a heoring. on January21.2016. the FAA deniedthe City'srequest. [FAA Item 21C].

15 August 2016 Page4. Case: 16-72827, 08/25/2016, ID: 10100384, Dktl;:ntry: 1-5, Page 10 of 55 Nat•onal BusmessAlrcroft7\ssoc•alion, et al v. City ofSanto Monrca, California \FAA Docket No. 

### 16-14-04) change in the totalproject budget cost under the grant. " 

### [FAA Item 14]. On November 8, 1999, the City executed AmendmentNo. 1. [FAA Item 5, Exhibit2]. By letterdated September 27, 2002, the City requested yet againto amend Grant No. 3-06-0239-06 (II) 

### to "increaseparticipation amount by $240,600 to a total of$1,845,300 to reflect increasedcost andchangedconditions that occurredduring construction." 

### [FAA Item 5, 

### Exhibit 4]. However, the FAA replied to 

### the City and indicated that the 1994 grant was "financially and administratively closed." [FAA item 12]. On May 7, 2003, the City submitted a second letter renewing the request for additional funds for the project. Notwithstanding thatthis request was being withheldpending the outcome ofan 

### FAA Notice of Investigation, the City "implore[d] the FAA to reconsiderthis matter and approve" the amendment, so the funds 

### can be used to enhance and maintainthe SantaMonica Airport. [FAA Item 11]. As a result, the FAA agreed to "reopen the grant to amendthegrant agreement, thereby increasingthe maximum US. obligation." 

### [FAA Item 12}. Accordingly, the FAA offered the City a grant amendmentthat increased the federal obligation to $1,845,300. The City accepted the offer on August 27,2003. [FAA Item 5, 

### Exhibit2]. The amendment provided, inpart, The maximum obligation stated onPage 2, condition I, 

### is hereby increased by $240,600.00, from $1,604,700.00 to $1,845,300.00. All otherterms and conditions ofthe Grant Agreement remain in full force and effect. [FAA Item 5, Exhibit 2}. The Final Construction Report, Airport Improvements, Santa.MonicaAirport, AlP Project NoJ-06-0239- 06 (II)

### provided the timing for Phase II 

### and included a final inspection ofthe completed work on March 27,2002. [FAA Item 13]. 

### V. APPLICABLE fEDERAl. lAWAND FAA POLICY The Federal role in civil aviation is augmented by various legislative actions that authorize programs for providing Federal funds and other assistance to local communities for the development ofairport facilitie.s. 1n each such program, the airport sponsor assumes certain obligations, either by contract or by restrictive covenants inproperty deeds and conveyance instruments, to maintain and operate its airport facilities safely and efficiently and in accordance with specified conditions. Commitments assumed by airport sponsors in property conveyance orgrant agreements are important factors in maintaining 

### a high degree ofsafety and efficiency in airport design, construction, operation and maintenance, 

### as well as ensuringthe public fair and reasonable access to the airport. 

### A. The Airport Improvement Program (AlP) Title 49 U.S.C. §

### 47101, etseq., 

### provides for federal airport financial assistance for the development of public-use airports under the AIP established by the Airport and Airway Improvement Act of 1982, (AA!A) as amended. Title 49 U.S.C. §47107, 

### etseq., sets forth assurances to which an airport sponsor agrees as a condition ofreceiving federal financial assistance. Upon acceptance ofan AIP grant, the assurances become abinding contractual obligation between the airport sponsor and the federal Government. The assurances made by airport sponsors in AiP grant agreements are important factors in maintaining a viable national airport system. 

### B. Airport Sponsor 

### Assurances As a conditionprecedent to providing airport development assistance under AlP, 49 U.S.C. §

### 47107, et 

### seq., the Secretary ofTransportation and, by extension, the FAA mustreceive certain assurances from the 

### airport sponsor. Title 49 U.S.C., §

### 47107(a) sets forth the statutory sponsorship requirements to 

### which an
15 August 

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### Dkt,Entry: 1-5, Pag,e 11 of 55 National 

### Bus1ness AircrOffAssoctotion, et afv. City ofSanto Montca. Califomta [tAA Docket No. 16-14-04] 

### airport sponsor receiving federal financial assistance must agree, the FAA has also identified assurances that are necessary to carry outthe program. The FAA has statutory authority to enforce compliance with the sponsor assurances. FAA Order 5190.6, 

### FAA Airport Compliance Manual (Order), provides the assurances for sponsors and policies and procedures to be followed by the FAA in carrying outits functions related to compliance with federal obligations ofairport sponsors. The FAA considers it inappropriate to provide federal assistance for improvements to airports where the benefits ofsuchimprovements will notbe fully realized for the duration oftheir useful life ordue to inherentrestrictions onaeronautical activities. Assurance (B)(l ), which addresses the duration ofthe grant assurances, provides that "the terms, conditions and assurances ofthe grant agreement shall remain in 

### full force and effectthroughout the useful life ofthe facilities developed or equipment acquired for an airport development or noise compatibility program project, or throughoutthe useful life ofthe project items installed within 

### afacility under a noise compatibility program project, but in any eventnot to exceed twenty (20) years from the date ofthe acceptance ofa grant offer offederal funds for the project. However, there shall be no limit on the duration ofthe assurance against exclusive rights orthe terms, conditions, and assurances with respect to real property acquired with federal funds. Furthermore, the duration ofthe Civil Rights assurances shall be as specified in the assurance." 

### C. Appealing the Director's Determination A party adversely affectedby the Director's Determination may file an appeal with the Associate Administrator within 

### 30 days afterthe date ofservice ofthe initial determination. [14 C.F.R. § 

### 16.33(c

## )J. The Associate Administrator does not consider new allegations or issues on appeal unless finding good cause to do so. [14 C.F.R. § 

### 16.33(f)]. Review by the Associate Administratoris limited to an examination ofthe Director's Determination and the administrative record upon which such determination was based. Failure to 

### raise issues and allegations in the original complaint documents may be cause for suchissues and allegations to be deemed waived and not reviewable upon appeal. FAA's 

### Responsibility with Regard 

### to

**~n** Appeal 

### Pursuant to 14 C.P.R.§ 16.33(b)(l), the Associate Administrator will issue a final decision on appeal from the Director's Determination, without 

### ahearing, where the complaint is dismissed 

### after investigation; a bearing 

### is not required by statute andis not otherwisemade available by theFAA; nr the FAAprovides opportunity for a

### hearing to the respondent and the respondent waives the opportunity for a hearing as provided in subpartE ofPart 16. In such cases, the Associate Administratorwill use the following analysis: (1) Are the findings offacteach supported by apreponderance ofreliable, probative, and substantial evidence contained in the record? (2) Are conclusions made inaccordance with law, precedent, and policy? (3) 

### Are questions on appeal substantial? (4) Have any prejudicial errors occurred? [14 C.F.R. 

### § 

### 16.33(e); 

### see also, e.g., Ricks vMillington Municipal Airport, FAA Docket No. 16-98-19, December 30, 1999, Final Decision and Order, p. 21].

15 

### August 2016 Page6

### . Case: 16-72R/7 08//5/2016 

### ID· 10100384 flktEntrv.: 

### 1-5 Pac;te 12 of 

### 55 National Business Aircrafffi.Ssocialion, eT 01 v. Cffy ofS'anta' NloniCa, caTifolma 1rAATiocket No. 16-14-04)


### VI. ISSUES ON APPEAL The Associate Administratorhas identified the following issues to be reviewed onAppeal: 

### Issue 1- Whether the Director erred in finding thatthe City by entering into a 2003 Amendmentto the 1994grant agreement, extendedthe City's grant assurance obligationsfrom 2014to 2023; Issue 2- WhethertheDirector erred in finding thatthe Complainants demonstratedthattheywere "directly and substantially affected," asrequired by 14 C.F.R § 

### 16.23(a); Issue 3- Whetherthe Director erred in finding that Complainants adequately pleaded a claim under Part 16as required by 14C.F.R. § 

### 16.23(bJ(1); and Issue 4- Whetherthe Director erredin finding thattheComplainants complied withthe requirement under 14 C.F.R § 

### 16.21to engage in good faith effortsto resolve theircomplaint informally. [FAA Item 22, 

### pages iHii]. 

### VII. ANALYSIS AND DISCUSSION On Appeal, the City argues that the Director's Determination "iscontrary to law, precedent, and policy and is arbitrary and capricious and an abuse ofdiscretion." Each ofthe issues identifiedin SectionVI above is addressed in this Section, and 

### inaddition the AssociateAdministrator is addressing, atthe outset ofthis Analysis and Discussion, the City's

### Petition to Supplementtherecord. [FAA Items 22A and 22B]. OnJanuary 9, 2016, the City filed a 

### Petition to Supplement the record. The City requests that it be permitted to supplementthe record with a declaration ofSusan McCarthy, former City Manager, and requests leave to supplement its petition to include a declaration ofJeffMathieu, former Airport Director. On January !3, 2016, the City filed a Notice of Filingtransmitting the declaration ofJeffMathieu. [FAA Items 22A and 22B]. The City asserts the declarations from former City employees declare whatthey "actuallyunderstood in reviewing and executing the 2003 grant amendment." The City argues that good cause exists to allow this new evidence, and that these declarations representthe "first opportunity the City has to refute the Director's misstatementthatthe City 'knewor should have known' that accepting new funds would restart the date ofits grant assurances." [FAA Items 22A and 22B]. 

### In response, Complainants assert that the City has failed to show any good cause for the submission of these declarations at this late date, and the City's request should bedenied. Complainants claim the "new evidence proffered by the City is irrelevantbecause the City's contemporaneous-or even earliertmderstandings ofthe significance ofits actions 

### in 2003 are besidethe point." [FAA Item 24, page 2]. Title 14 C.F.R. §16.33(!) states that "any new issues orevidence presented in an appeal orreply will not be considered unless accompanied by a petition and good cause found as to why thenewissue orevidence was not presentedtothe Director," andthat "sucha petition must: (I) Set forth the newmatter; (2) Containaffidavits ofprospective witnesses, authenticated documents, or both, oran explanation ofwhy such substantiation is unavailable; and (3) Contain a statement explaining why such newissue orevidence could not have been discovered in the exercise ofdue diligence prior to the date onwhich the evidentiary record closed."
15 August 2016 Page 7Uponreview ofthe City's submissions, the Associate Administrator finds that the declarations byformer City employees McCarthyandMathieure-state theposition taken bythe City that it understood the 2003 grant to be an amendment and not a new grant. In so doing, the declarations clarify theposition ofthe City, andthus the Associate Administratorfinds good causeto considerthese declarations. Therefore, the City'spetition is granted, and the declarations are admitted into the record. Issue 1- Whetherthe Director erred in finding thatthe City byenteringinto a 2003Amendmenttothe 1994grant agreement, extended the City's grantassurance obligationsfrom 2014to 2023. The Associate Administratorhas organized the City'sarguments for Issue 1 under four primary subissues: (a) Plain Language; (b) Consideration; (c) New Obligation Akin to New Grant, and (d) Ambiguity.


### a. Plain Language OnAppeal, the City contends the "theplainlanguage ofthe agreements makes clearthat the City's grant obligations expired in 2014." [FAA Item 22, page 

### 1 0]. The City argues thatthe "proceeding should begin and end with theplain language ofthe agreements the City signed with the FAA," and that the "contractual language provides inno uncertain terms that any obligations the Cityincurredbyexecuting the relevant agreements expired in 2014." [FAA Item 

### 22, page 

### II]. The City claims thatAmendmentNo. 2, executed in 2003, did not change 

### matters, and expressly left the expiration date in place. [FAA Item 22, page 12]. In theirReply, Complainants point outthatthe "Citydoes not dispute thatthe duration ofthe obligation periodis not explicitly addressed bythe 2003 grant modification, nor did any language inthe 1994 grant agreement establish 2014 as an unalterable expiration date." Additionally Complainants argue that "the City's language-based argument for the interpretation ofthe 2003 grantmodification isnot compatible with the factual record or the law," and "instead,the FAA must determine how language in the modification shouldbe interpreted." (FAA Item 24, page 4]. The Associate Administrator is not persuaded thatthe plain language ofthe grant amendment as asserted bythe City establishes the grant expirationin 2014. On the contrary, a plainreading ofthe grant amendment language that "Ail otherterms and conditions ofthe Grant Agreementremainin full force and effect" is reasonably read to applytothe Grant Assurance (B)(l) Duration and Applicability, and the conclusion that the City's grant assurance obligation expires in 2023. [FAAItem 3 ExhibitA].· The 

### Grant Assurance (B)(I)Duration and Applicability Assurance in addressingthe durationofthe grant assurances provides that: The terms, conditions and assurances ofthe grant agreement shall remain in full force and effectthroughout the useful life ofthe facilities developed or equipment acquired for an airport development ornoise compatibilityprogramproject, orthroughout the useful life oftheproject items installed within a facility under a noise compatibility programproject,butin any eventnot to exceed twenty (20) years from the date ofacceptance ofa grant offer offederal funds for theproject. However, there shallbe no limit on the duration ofthe assurances against exclusive rights ortheterms, conditions, and assurances with respect to real property acquired with federal funds. Furthermore, the duration ofthe Civil Rights assurance 

### shall be as specified inthe assurance. As tbe Director properly noted, Assurance (B)(!) does notprovide a time-certain date onwhichthe assurances expire, butrather provides the methodology for determiningthat date. And more importantly, it reflects the FAA's expectation thatthebenefit to the public extends, ingeneral, for approximately 20 years. [FAA Item 20, page 

### 13].
15 August 2016 Page8. Case: 16-728?7 08/?S/2016 ID· 10100384 OktEntrv.: 1-5 PaCJB 14 of 55 Nat1onal BUSiness AircraftASSOCiOTIOn, e1 ol v. City ofSantd li/lomca, California \f'AA Docket No. 16-14-04)
The Associate Administrator finds thatthe Director did not errin fmding that the City by entering into a 2003 Amendment to the 1994 grant agreement, extended the City's grant assurance obligations from 2014 to 2023. As discussed below, the acceptance ofa newgrant offerrestarts the 20-year clock. The City in its Appeal also claims that the 1994 AlP grant was consistent with the 1984 Settlement Agreement [FAA Item 1, Exhibit 5}. The City states that in accordance withthe 1984 Settlement Agreement, the 1994 Grant Agreement did not "extend or alter the obligation ofthe City to operate the Airport," and "itcontinued topennitthe Cityto discontinue or otherwise modif'y operation ofthe airport as ofJuly 

### I, 2015 to servethe bestinterest ofits residents." [FAA Item 22, pages 

### II and 12]. The City adds that "given the June 30, 2015 termination date ofthe 1984 Agreement, the City considered one ofthe 1994 Grant Agreement's most importantterms and conditions to be that any obligation imposed bythe Agreement would expire in2014" and that "AmendmentNo.2 made clear that this 2014 expiration date remained infull force and effect" [FAA Item22, page 13]. In 1\.rrther support, the City relies onthe declarations submitted by the former City Manager Susan McCarthy and the former Airport Director JeffMathieu. Ms. McCarthy in herdeclaration explains that she signed Amendment No.2, and that itwasthe City's policy "to not take any actionthat could extend the time beyond July 

### I, 2015 that the Citywould beobligated to operate the Airport" [FAA Item 22A]. Mr. Mathieu, inhis declaration, references a City StaffReportthat states "Anyacceptance offunds for this grantwill notbind the Cityto operate the airport beyond the 2015 date established inthe 1984 Agreement with the FAA." Mr. Mathieu declares thathadhe been aware that an amendmentto the 1994 grant at,>reement would further obligatethe Cityto operate the Airportpasttheexpiration ofthe 1984 Agreement, 

### he would have taken steps to make sure that City staffnot execute such an amendment. fFAA Item 22B]. Complainants contest the City's position that the 1984Agreement "represented the definite end ofthe City's legal obligationto operate the Airport." [FAA Item 24, page 3]. Complainants pointto language in the Director'sDetermination for its position that "federal funding ofprogram improvements intended to further this Agreement, executed priorto July 1, 1995' shall not extend the City's obligation to operatethe Airport. Indisputably, the 2003 grant modification was executed afterJuly 1, 1995." [FAA Item 24, page 4, and Director's Determination, Item 20, page 18]. The Associate Administrator found Ms. McCarthy's and 

### Mr. Mathieu's respective declarations helpful in clarifying the City'sposition that the funds received in 1994 did not extend the City'sobligation to operate the airport beyond July I, 2015,the date setby the 1984 Settlement Agreement. However, the fact remains that the City executed an amendment in2003 well afterthe July 1, 1995 date set out in the 1984 Settlement Agreement. The Associate Administrator is not persuaded by the City'sargument that the 1984 Agreement arbitrarily controlled the expiration date ofan amendment to the 1994 grant when 

### it was signed eight years afterthe July 1, 1995 recognized date. The 1984 Settlement Agreement itselfmakes clear that onlythose grant agreements executedpriorto July 1, 1995 would not extend or alter obligations. [FAA Item 1, Exhibit 5, pages 8-9]. The amendment at issue here concerns the 2003 AIP grant Against this background, the AssociateAdministratorfinds thatthe 1984 Agreement does not set or otherwise limitthe expiration date orconsideration ofthe 2003 grant amendmentto 2014.

15 August 2016 Page 9. Case: 16-7?877 

### 08/75/2016 ID· 

### 101pro3R4, nktEntr\1: 

### l-5

**Pa~** 1s of 

### 55 Natrona! Bus1ness AwcrdffAss'oclo'lion, efal v. City o :>anla Mon1ca, CaTiforn1a fCAADocket No. 16-14-04)

b. Consideration On Appeal, the City challenges the Director's finding relative to the need for the City to provide something inexchange for the additional funds provided by FAA, namely an exchange ofconsideration. The City claimsthatthe "Directorerredinpresumingthat in 2003 consideration was necessary oreven relevant." The City asserts thatthe Director failed to cunsider thepossibility that, under general principles ofcontract law, a modification to a preexisting contract ofthis sort maybe affected without consideration. [FAA Item 22,page 14]. The City contends that the Supreme Court decisions relied on by the Director "donot, however, stand for the propositionthat each and every paymentoffederal funds mustbe supported by consideration,"butrather they "instead describe the limits ofthe federal government's powerto impose conditions onthe recipients offederal funds." [FAA Item 

### 22, page 

### 1 5]. The City assertsthat "even ifthe City were required to provide consideration in exchange for the FAA's increase in funding, the Director erred inconcluding thatthis consideration musthave beenthe City's acceptance ofan additional nine years ofgrant assurance obligations." The City states its promise to "use the reimbursement funds to 'enhance and maintain the SantaMonicaAirport' was itselfbeneficial to the FAA.'' [FAA Item 22, page 16]. The Complainants contendthat the Director was correct to concludethat the 2003 grant modification required consideration, andthat to the extent itdid, the 2023 date was the consideration. The Complainants claim that '"it is well established that federal governmentofficers lack authority to enter into contracts, including modifications, under which the governmentreceives nothing." [FAAitem 24, page 8]. In further support oftheir position, the Complainantsrely on State lawin claiming that "in California itremains mandatory that contract modifications be accompanied by

**consideration.~** [FAA Item 24, page 9]. '!1Je Associate Administratordoes notfind thatthe Director erredwhenbe concluded thatthere was considerationfor the 2003 grant amendment. [Item 20, page 16]. The Associate Administrator agrees with the Directorthatthe 1994 old grant hadbeen closed and the second amendmentwasmutually agreed to and signed by bothparties, and thatthere was an AlP grant offer, acceptance and an

### exchange of consideration (emphasis added). As discussed in the Background section, the FAA closed the 1994 grant in 2001 and only after the City "implored" the FAA to provide the funds did the FAA agreeto the City's request for additional funds. 

### The receipt ofthese additional funds is the critical factor here. The Directorproperly noted "it is clear what considerationthe FAAprovided

- additional funding," for new infrastructure, and simply continuing to adhere to the grant assurances using the date ofthe award ofthe original grant would provide no new considerationto support the additional funds provided. Eventhe City gives tacit acknowledgment that consideration couldbe required inexchange for the FAA's increase in funding, while disagreeing onthe fonm ofthe consideration. [FAA Item 22,page 16]. The Associate Administrator finds that the Director did not errinfinding thatthe extension ofthe grant assurance obligations until 2023 was appropriate consideration inexchange for additional federal funds providedto the City.
c. New Obligation Akin to New Grant

15 August 2016 Page 10. Case: 16-72827, 08/25/20t6 JD· 101p0384, Dkt[=:ntrv: :),-5, Pag_e 16 of 55 National Bus1ness Alrcrat!Assoc,afron, e 

### al v. City o ,onto Mon1ca, California [rAA Docket No. 16-14-04) On Appeal, the City challenges the Director's premisethatAmendment No. 2 was akin to a new grant, rather than a mere modification ofthe existing grant agreement. The Cityexplains that "anexamination ofthe panoply oflaws, policies, practices, precedent, and guidance regarding FAA grant assurances reveals no category ofmodification 'akinto a new grant.' Nothing inthe grant assurances themselves, or in any agency guidance materials, referto such a concept" [FAA Item 22, page 23}. The City states that "no where does it indicate that, by simply increasing funding for an existing gran!, such an amendment may infact be 'akin to a new grant.'" [FAA Item 22, page 24]. The City claims 

### that the FAA's "omissions [innotreporting about the grant AmendmentNo. 2 

### in the new AlP GrantAwards orin the Grant Histories database] confirm that the agency did not consider the City to have been awarded a new grant oranything akin to a new grant in2003, when the parties executed AmendmentNo.2." [FAA Item 22, page 25]. The Complainants dismiss this claim as "much ado about nothing," and that it was "presumably not the Director's intent to suggest the existence of orcreate a new FAA funding category." [FAA Item 24, pages 10 and 11]. The Associate Administrator agrees with the Complainants' position on this sub-issue. In no case does the Director's onereference to the word "akin" in the phrase 

### that "the Second Amendment was a new obligationakin to a new grant" to mean the Director was creating a new category ofgrant modification. The plain meaning ofthe word "akin" is similaror related, and that is what the Associate Administrator surmises was the Director's intent in noting thatthe 2nd Amendment was a new obligation akin to a new grant. The Associate Administrator concurs with Director'spositionthat a newobligation offunds via a second amendment that wasmutually agreed to and signed by both parties, was an AlPgrant offer, acceptance and anexchange ofconsideration. The Associate Administrator also wants to make clear that inno case did the Director's Determination announce an abrupt and arbitrary change inthe FAA's treatment ofgrant obligations, and there is no requirement for notice and comment as argued by the City. The FAA's concurrenceto increasethefederal invesrment into SMO was done through a grant amendmentto a re-opened AlP grant. This amendment did not have itq own expiration date, but rather made direct reference to the required AIP language for suchgrants, which specifically refers to the useful life ofthe improvements not to exceed 20 years. The issue then is to discuss the impact ofthe new 2003 AlP grant amendmentuponthe expirationdate to whichthe City would be obligated. Asnoted inthe grant agreement itself, the date isdetermined bythe(!) useful life ofthe projectand (2) the not-to-exceed date ofno more than 20 years from acceptance ofthe grant offer. The AlP grant and funds offerreferenced here is the 2003 offering. The AssociateAdministratorfmds that the Director properly concluded 

### that the grant assurance obligation maximum duration is 20 years from the date ofacceptance ofthe grant- August 27,2023, rather than the longer useful lifedate ofMarch 27, 2027.4 d. Ambiguity On Appeal, the City claims thatthe Director's Determination was premised on a misapplication ofbasic contractual principles permitting the FAAto resolve any ambiguityin its fuvor. The City states that "here

4 The Director's useful life findingwas not ra!sed on appeal, and thus is not at l:.sue in thfs decision.

15 August 2016 Page 11Case: 16-72827,08/25/2016 ID· 10lp10384, DktEntr\1: 1-5 PaQR 17 of!'i5 National Bus1ness 7\ircrdtf 7\ssoclofion, efal v. Cify o S"on1a Monica, caiTforhJa (CAA Dodet No. 16-14-04) the FAA drafted both the 1994 Grant Agreement and AmendmentNo. 2," and that "to the extent thatthese agreements create ambiguity as to the duration ofthe City's grant obligations, the City'sreasonable interpretation must prevail overthat ofthe FAA." [FAA Item 22, pages I7 and 18]. The Citytakes the position thatthe Director's "newfoundrule that certain amendments to grant offers will again trigger the grantassurances is ambiguous and procedurally improper," and ''the ambiguity inherent in the Director Determination's attemptto shoehorn AmendmentNo.2 into the category of"newgrants' is illustrated by its differing treatment ofAmendmen! No.1." [FAA Item 22, pages 26 and 27]. The City contends that the Director suggestedthatAmendment No. 1,unlike AmendmentNo.2,would not have restarted the Assurance B(l)'s 20-year clock. [FAA Item 22, page 27, citingto Director's Determination, at page 16], andthe City asserts that the Director cited "two separate and not necessarily congruent rationales for this distinction: (I) AmendmentNo. 

### J continued to provide that there would be 'additional work performed'; and (2) Amendment No. 1 'add[ed] no funds."' [FAA Item 22, page 27]. The Complainants assert that the City'sargument "that evenifthe language ofthe 2003 grant modificationis notunambiguous it should be construed against the FAA." Complainants represent that this argument was fairly considered and properly rejected by the Director, in reliance on the Supreme Court's holding in Bennett v. Kentucky Department of Education, 470 U.S. 656,669 (1985), distinguishing 

### U.S. v. Seckinger, 397 U.S, 203, 210 (1970). TheComplainants claim that "the language in the 2003 grant modificationmust be construed in favor ofthe FAA," and "forgrants that originate in and are governed byfederal statutes, the standards ofconstruction governing statutory interpretation, not the rule ofcontraproftrentem, are to be applied." [FAA Item 24, pages 4 and 5]. The Associate Administrator finds thatthe City has misconstrned the Director's language as to AmendmentNo. L For clarity it is necessary to include the Director'sprecise wording, "Unlike the first amendmentto the grant, changing the description ofworkbut adding no funds, the second amendment involved an additional significant obligation offederal funds and no additional workperformed or benefit to the public otherthan from the exteusion ofthe grant

**covenant.~."** [FAA Item 20, page 16]. The Associate Administrator is not persuadedbythe City's arguments. The Director properly concluded that federal grants are ahybrid -partly a contract in terms ofvoluntary offer, acceptance, and consideration, and partly a creature ofstatute, and properly relied onthe Supreme Court'sholding in Bennett. [FAA Item 20, page 18]. Additionally, the Associate Administrator does notfind thattheDirector's Determination was premised ona misapplication ofbasic contractual principles that permittedthe Director to resolve an ambiguity in FAA's favor. The Associate Administrator finds that the Director did not err in concludingthatthe expiration ofthe City'sgrant obligations was basedupon its execution ofAmendmentNo. 2 andits receipt ofadditional funds in 2003. As the Director recognized, courts have held that FAA is entitled to deference ininterpreting its grant assuranceobligations.5 [FAA Item 20, page 18]. Conclusion Issue 1 Against this background, the Associate Administratorrejects the City's arguments, and concludes thatthe Director'sDeteiT!lination was not arbitrary, capricious, or anabuse ofdiscretion. The

**~See** BMI Salvage Corp. v. FederalAviation Administration. Miomi-Dode County, Florida, U.S. Court ofAppeals llfh Circuit No. i

**1~** 12583, {July 19, 20 12), the court found becausethe FAA's interpretation is not plainlyerroneous or inconsistentwith the statute, we conclude thatthe FAA's finding that demorrtion is non-aeronautical is entitled to deference.

15 August 2016 Pagel2

### Case: 16-77R27, 08/25/2016 10· 

### 10100384, DktEntry: 

### l-5, Pag_e 18 of 55 Notional Bus1ness AJrcrCilf 7\ssocJofion, et al v. City of Sonia Mon1ca. California [tAA Docket No. 16-14-04) Associate Administratorfinds the Director did not misapplytheplain language ofthe Agreements, did not rejectthe plain meaning ofthe contractual language; or did not make newfoundcontractual interpretations, and finds that all other arguments madeby the City are not supported bythe evidence inthe record. Consequently, the Associate Administratorfmds that the Director correctly determined thatthe City, by requesting accepting, and receivingthe FAA offer in2003 for additional funds results in the City's grant assurance obligations being extended from 2014 to 2023. 

### Issue 2

- Whetherthe Director erred in finding thattheComplainants demonstrated thattheywere "directly and substantially affected" as required by 14 C.F.R § 

### 16.23(a). The City takes the position that Complainants have notbeen "directly and substantially affected by any alleged noncompliance," and thus they lack standing. The City also argues that "becausethe Cityhas not engaged in any 'noncompliance' at all·--alleged or otherwise-theComplainants cannot satisfy this standing requirement." [FAA Item 22, page 29]. The City also asserts that Complainants "have failed to allege any concrete harm whatsoever" and "[i]nstead, theyhave offered vague and conc!usory allegations that their 'business and operations already have been, currently are, and will continue to be adversely affected bythe City's repeated public announcements' concerningthe airport's future." The City also states that "evenifthe City had somehowrepudiated the Grant Agreement, the Complainants are notthemselves parties to that contract, and may complain ofsuch abreach onlyifit somehow injures them." Finally, the City rejects Complainants' assertion andthe Director's Determination thatbeing "directly and substantially affected" can be related to the "uncertainty" created by the City's position with regards to its grant assurances. [FAA Item 22, pages 30 and 31]. In theirReply, Complainants state that they are directly and substantially affected. Complainants addthat "asrecognized by the Director's Determination, Complainants are directly and substantially affected by the uncertainty created by the City's defiant and unique position that it simply is no longer obligated to comply with [Grant Assurance] (B)(l), or any other ofthe GrantAssurances." Complainants assert that "they cannotplan for the future

- as they are entitled to do

- without the certainty thatthe City will comply with fundamental ground rules," since the City had made clear "its intent to close the Airport at first opportunity." [FAA Item 24, page 13). The Associate Administrator finds that a review oftherecord substantiates that Complainants are in fact directly and substantially affected by the City's stated position that its grant obligations have expired. As correctly noted in the Director's Determination, Complainants' concerns arereasonable and based upon directions the City Council has provided to City staff(i.e. directing studies ofpotential closures) and a City Resolution, passed in 1981 but neverrescinded, that states the policy ofthe City is to close the airport. [FAA Item 20, pages 9 and10]. Moreover, the Director properly recognized 

### that the City is currently appealing an orderdismissing a case inwhichthe City challenged its Surplus Property Act (SPA) obligations and seeks an order "thatthe United States shall cease and desist fromtaking any action to require Santa Monicato operate the Airport Property as an airport after the 1984 Agreement expires in Julyof2015." [FAA Item 20, pages 9 andlO]. Arguing thatitis no longer obligated underthe AIP grant assurances; the Cityhas added a greatdeal of uncertainty withmeasurable and substantial consequences for all airport users. Assuming the assurances are infact ineffect, the stability and fundamental ground rules the assurances create are undermined by the City'srepudiation ofits obligations. This istrue regardless ofwhether the Council has taken action yet The City appears to leantowards a full or partial closure and eliminationofexisting aviation uses,
15 August 2016 Page13. Case: 16-728?7 08/25/2016, 10· 10100384, DktEntr\L: 1-5 Paq_e 19 of 55 Nat1onal Bus1ness A1rcraf!AssoCIa lion. e! al v. tily ofSanta !VIomca, ca1ifornia 1rAA Docket No. 16-14-04) 

### which the City hasrepeatedly called for. 

### Itis important to note that the grant assurances provide uniform standardsunder whichto operate and protect the investment ofthe United States and the rights ofairport users and tenants. These include the fundamental assurance that the airport will beopenfor public use on reasonable terms. The City's assertion that Part 16 standing requires "concreteharm," appears to misrepresentthe language in 16.23(b)(4). Section 16.23(b)(4) calls for a general description ofhow a complainantis directly and substantially affected by the things done or omitted to be done by the airport sponsor. Flexibility is built into this section, and includes an omission ofaction that causes a direct and substantial impactupon an airport user, especially onebased at the airport. The FAA must make ajudgment call in all cases as to whether a sponsor is reasonablymeeting its federal commitments. ·A sponsor meets its commitments when: (1) the federal obligations are fully understood; (2) a program (e.g., preventive maintenance, leasing policies, operating regulations, etc.) is in place that the FAA deems adequate to carry out the sponsor's commitments; (3) the sponsor satisfactorily demonstrates that such a program is being carried out; and, ( 4) past compliance issues have been addressed. [FAA Order 5190.68, paragraph 

### 2.8, page 2--6] Failing to understand its federal obligation is a significant omission on the City's part as a means to ensure that SMO remains a viable public airport within the meaning and intent ofthe federal investment at the airport. Accordingly, the Associate Administrator finds thatthe Directorproperly found that the Complainants were directly and substantially affected bythe uncertainty ofthe grant expiration date and have standing to bring this Complaint seeking clarification ofthat date. Issue 3- Whetherthe Director erred in finding that the Complainantsadequately pleaded a claim under Part 16asrequired

### by 14 C.F.R. § 

### 16.23(b)(1). 

### On Appeal, the City argues that "Complainants failed to state a claim under Part 16, andthushave failed to establish any basis for the Director'sjurisdiction," and Complainants failed to identifY "the specific provisions ofeach Actthat [they] [believe] were violated," as requiredby 14 C.P.R. 

### § 16.23(b)(l). As a result, the City claims the FAA cannot "make a determination as to whether an airport sponsor is currently 

### in compliance." In support ofits arguments, the City asserts that it "is currently in compliance" and "hastaken no actions that would violate its grant assurances, nor has itindicated any immediate intent to do as much." The City argues that the Directorincorrectly relied on the "theory"that the Cityrepudiated its obligations and that the Director's Determination is an "advisory opinion." [FAA Item 22, pages 31-32}. The City adds that in SMAA 

### v. Cityof Santa Monica, 

### Docket No. 16-99·21, Final Decision and Order at 22 (Feb. 4, 2003) the FAA stated that "the purpose ofa Part 16 investigation process is to determine whether ornot an airport sponsor is in compliance with its Federal obligations in the current factual situation" andthatthe Director by disregarding this precedent "issued an advisory opinion, one that was outside thejurisdiction conferred in Part 16." [FAA Item 22, page 32]. In response to the City's argument on Appeal, Complainants assert thatthey stated a claim under 14 C.F.R. Part 16. Complainants argue two mainpoints: (1) there is no general prohibitiononadvisory opinions, and (2) 14 C.F.R Part 16 allows the FAA to address currentpractices that are likelyto resultin future violations. The Complainants rely on the case, JetAwayAviationLLCv. Boardof Commissioners, Montrose County, Colorado, 

### DocketNo. 16-06-01, Director's Determination, p. 34 (November 6, 2006), in support oftheir position that the FAA is not prohibited from resolving a dispute at issue until a violation is imminent orhas actually occurred. [FAA Item 24, page 14].
15 August 2016 Page 14. Case: 16-728?7 08/?5/2016 10· 10100384 rlktEntrv.: 1-5 Paue 20 of S5 Nat1onal Bus1ness Alrcraff'AssoCialion. eT 01 v. Cify ofSanla'IV\on1ca, califom1a 1rAADod:ei No. 16-14-04) As notedin the Director's Determination, theFAA is responsible for enforcing the grant assurances. The FAA has recognizedthat anyactionthat iscontrary to the sponsor's grantassurances is within the scope ofthe FAAto review and address. When information contained 

### inthe administrative record to a Part 16 complaint leads the agency toreview areas of

**noncompliance~**whetherornotthey are alleged by a

**complainant~**the agency will, nonetheless, make a fmding on those areas. All potential grant assurance violations are withinthe scope ofthe FAAto review and address, whether alleged in a Part 16 complaint oridentified through any othermeans.6 Asthe Complainants state, the 14 C.F.R. Part 16process does allow the FAA to address currentpractices orpositions that couldresultin violations. In this case, the allegation broughtforward by the Complainants is whether Grant Assurance (B)(l), which addresses the duration ofthe grant assurances, is in effect or when itexpires. The City has made clearin its filings that it regards its grant obligations to the FAA to have ended onJune 29, 2014. By arguing repeatedly that the 2003 AlP grant obligations expired in 2014, the Cityis clearly rejecting notonly the term, butby implication, all its obligations as well. As such, this is more than alleged orpotential noncompliance, itis the stated and official position ofthe City as the airport sponsor. 

### Inthat respect, it is not a "theory," as the Citystates, but alegal position on the City'spart. Moreover, the Associate Administrator disagrees with theCity'scharacterization that the Director's Determinationwas merely an advisory opinion that was outside thejurisdictionofPart 16. Stating, as the City does, that it has "notcommitted a violation ofany Act or Grant Assurance" while at the same time taking the position that SMO is no longer obligated, is not coherent. Thereis not a valid alternative argumentto be made. The Associate Administrator finds that the City cannot in good faith reject the applicability ofthe grant assurances by claimingtheyhave expired and at the sametime claim that it is in compliance with its federal obligations. [FAA Item 22, page 31]. Again it is important to recognize that an airport sponsor meets its federal obligations when:(!) thefederal obligations arc fully understood; (2) a program isinplace that the FAA deems adequate to carry out the sponsor's commitments; (3) the sponsor satisfactorilydemonstrates that such a programis beingcarried out; and, (4) past compliance issues have been addressed. [FAA Order 5190.6B, paragraph 2.8, page 2"6]. This case involves the City'sunderstanding ofits federal obligations, including the duration ofthose obligations, Clearly, the City has not fully understoodthe duration ofits AIP obligations. The references made by the City to

### NorthwestAirlinesInc., eta/. v. 

### IndianapolisAirportAuthority. eta!., Docket No. 16-07·04,Director'sDeterminationat 29, 44 (Aug. 19, 2008) and

### SMAA v. City of Santa Monica, DocketNo. 16-99-21, Final Decision and Order at 22 (Feb. 4, 2003) are outofcontext. This is becausethere is no ambiguity concerning the City'sposition. There is no "hypothetical controversy" or "speculation," onthe part ofthe City based on its position that its grant assurances obligations expiredin 2014. The Complainants properly pleadedthat they were directly and substantially affected by the uncertainty ofthe grantexpiration date in violation ofthe City's federal obligations Accordingly,the Associate Administrator finds thatthe Directordid not err in finding thatthe Complainants adequately pleaded a violation ofthe City's federal obligations as required by 14 C.F.R. 

### § 16.23(b)(l), and that issuance ofthe Director'sDeterminationwas within thejurisdictionconferredby Part 16
.

.s .See Boston AirCharterv NorwoodAirport Commission, Norwood, Mossochusett.sL FAA Docket No. 16-07-03 {August 14, 2008} (Finoi Decision and Order), pages 26--27.

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### J-5, P.aqe 21 of 55 Nat1onal Buslness7\Jrcrafl ASSOCid!Jon, el al v. City ol' Santa MoniCO,'CalitOmJa [fAA Docket No. 16-14-04) 

### Issue 4

**~** 

### WhethertheDirector erred in finding thatthe Complainants complied withthe requirement under 14C.F.R § 

### 16.21toengage in goodfaith efforts toresolve theircomplaint informally. 

### "!be City takes.the position that the Director "erroneously overlooked" the "Complainants 'failure to satisfy their obligation to engage in good faith efforts to resolve the disputed matter" priortofiling their complaint."7 

### The City disagrees with the Director's position that "Complainants are not required to conduct continued informal resolution efforts when itappears clear that the City'sposition on the expiration date is longstanding and fixed." The City characterizes the Complainants' correspondence as "cursory" letters and thatthis "cannot have constituted the requisite substantial and reasonable effort to achieve resolution." [FAA Item 22, pages 32-33]. In addition, the City argues that "Complainants gave the City no opportunity to provide Complainants with assurances that mighthave obviated the need for these proceedings." The City summarizes its position onthis issue by stating that "Complainants engaged inno real etforts to negotiate with the City regarding its plans forthe airport" and that "their complainttherefore should have been dismissed." [FAA Item 22, pages 32-33). In their Reply, the Complainants state that it engaged in good faith resolution efforts. The Complainants cite to the Director's Determination in support oftheir position thatthey "are not obligated to continue to engage in future communications with an airport sponsor that has for all practical purposes signaledthat 

### itwill not comply with Grant Assurances." [FAA Item 24, page 15]. Part 16 addresses pre-complaint resolution at section 16.21. Specifically §

### 16.21 (a) requires a complainant, priorto filing a complaint under Part 16, to initiate and engage in good faith efforts to resolve the disputed matter informally with those individuals or entities believedresponsible for the noncompliance. Section 16.21(b) requires the complainant orits authorized representative to certify that (1) 

### the complainant has made substantial and reasonable good faith efforts to resolve the disputed matter informallypriorto filing the complaint; and (2) there is no reasonable prospect for practical and timely resolution ofthe dispute. Section 16.21(c) explainsthat the certification shall include a briefdescription ofthe party's efforts to obtain informal resolution that are relatively recent and demonstrated by pertinent documentation. The regulation makes clear that there is no required form or process for informal resolution, but in each case must meet the requirements. In the Director's Determination, the Directordenied the City's motion to dismiss the complaint for the Complainants' failure to engage in informal resolution. The Director noted that the Complainants were not required to conduct continued informal resolution efforts when it appears thatthe City's position on the expiration date is longstanding and fixed. The Associate Administrator acknowledges that the Complainants, tlnough counsel as their authorized representative, detail in their Part 16 Complaintrelatively recent efforts undertaken by the Complainants, with supporting documentation, to resolve the matterpriorto filing the Complaint. Additionally Complainants state thatthey have fulfilled the requirements of 14 CTR. §16.21. Although the Directordid not discuss that Complainants made a statement ratherthan a certification as to their good faith efforts under 14 C.P.R. §16.21, the Associate Administrator fmds itis a harmless errorin the Director's Determination. Accordingly, the Associate Administrator fmds that the Director did not err in determining thatthe Complainants reasonably satisfiedtheir duty to engage in good faith efforts to resolve their complaintpriorto filing the Part 16 complaint.

'See 14 C.FX § 16.2l(o).

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### 16-72R/7 08/?5/2016 ID: 

### 10100384

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### lc5, P.aqe 

### 22 of 55 Nat1onal BuSinessAircraflAssoCial!on, el i::ll v. City ot Santd N\on1ca. 'CalifOrnia lFAA DocKet No. 16-14-04) 

### VIII. FINDINGS AND CONCLUSIONS The FAA's role inthis Appeal is to determine whetherthe Director erred infindings offact orconclusions oflawin issuing theDirector's Detennination. Specifically, upon an appeal ofa Part 16 Director's Determination, theAssociate Administrator has reexamined the record, including the Dire"'tor's Determination, the administrative record supporting the Director'sDetermination, the Appeal and Reply submitted bythe parties, and applicable law and policy. Based onthis reexamination, the Associate Administratorconcludes thatthe Director'sDetennination is supported by a preponderance ofreliable, probative, and substantial evidence, and is consistent with applicable law, precedent, and FAA policy. The Appeal does not contain persuasive arguments sufficient to reverse any portionofthe Director's Determination. Therefore, the Associate Administrator affirms the Director's finding as reasonable and consistentwith Congressional intent in establishing the AlP. The grant assurances are designed to assurethattheFAA and the public receive a benefit in retnm for the federal investment. Assurance (B)(1) reflects the FAA's expectationthat the benefitto the public extends, in general, for approximately 20 years. As a result, the Associate Administrator affirms the Director's Determination that the AlP grant obligations for SMO expire in 2023. 

### ORDER ACCORDINGLY, it ishereby ORDEREDthat (1) the Director's Determination is affirmed, and (2) the Appeal is dismissed, pursuant to 14 C.F.R. 

### § 16.33. 

### RIGHT OF APPEAL A party to this decision disclosing a substantial interest in the final decision and order ofthe Federal Aviation Administration may file a petition for review pursuant to 49 U.S.C. 

### §46110, in the United States Court ofAppeals for the District ofColumbia Circuit orin the Court ofAppeals ofthe United States for the Circuit in whichthe person resides or

### has its principal place ofbusiness. The petition must be filed not laterthan 60 days after a Final Agency Decision has been served on the party. [14 C.F.R. Part 16, 

### § 16.247(a).]

Eduardo A. Angeles Associate Administrator for Airports

15 August 2016 Page 17. Case: 16·72R/7 08/75/2016 10· 10100384 DktEntr'L 1·5, P.aqe 23 of 55 Nat1onal Busmess AircraftASSOCiaTIOn, e"f Cll v. City of Santd IV\onica,"California [FAA Docket No. 16·14-04)


### INDEX OF ADMINISTRATIVE RECORD Docket No. 16-14-04 

### EXHIBIT 1 Item 1- Part 16 Complaint, dated July 2,2014. Exhibit!- City ofSanta Monica Inter-Department Memo dated January 23, 1962. Exhibit 2- Office ofthe Attorney General ofthe State ofCalifornia, Opinion No. CV 

### 74-317, dated May 30, 1975. Exhibit 3- City Council Meeting, dated June23, 1981, Resolution No. 6296. Exhibit 4- Newspaperarticle titled 

### "City rescinds eviction notices to airport firms," undated. Exhibit 5

- SantaMonicaAirportAgreement, dated January 31, 1984. Exhibit 6- City Council Report, City Council Meeting, March 25, 2014. Exhibit 

### 7- City ofSantaMonica Regular City Council MeetingAgenda, March 25, 2014. Exhibit 8- United States Court ofAppeals for theDistrict ofColumbia Circuit, The City ofSanta Monica, Petitioner,v. Federal Aviation Administration, Respondent; Final BriefofPetitioner City of SantaMonica, dated August 31, 201 0. Exhibit 9- United States District Court Central District ofCalifornia, City ofSantaMonica, Plaintiff, v. United States ofAmerica, Federal Aviation Administration and Michael P. Huerta, in official Capacity as Administrator ofthe Federal Aviation Administration. Defendants; Complaint for Declaratory ReliefUnder the Quiet Title Act and United States Constitution, dated October 31, 2013. Exhibit 10

- United States District Court Central District ofCalifornia, City ofSantaMonica, Plaintiff, v. United States ofAmerica, FederalAviation Administrationand Michael P. Huerta, in official CapacitvasAdministratorofthe Federal Aviation Administration, Defendants; Joint Rule 26 Report ofEarly Meeting ofCounsel, dated January 16,2014. Exhibit 11 -Letterfrom Richard 

### K. Simon to SantaOfficials, Rod Gould CityManager, Marsha Moultrie CityAttorney, and Stelios Makrides Airport Manager, dated June 11,2014. Exhibit 12- Letterfrom Ivan 

### 0. Campbell, Deputy City Attorney, for Santa Monica, to Richard K. Simon, dated June 23, 2014. Exhibit 13 -Letterfrom to Richard K. Simon to Ivan 0. Campbell, Deputy City Attorney, for Santa Monica, dated June 25,2014.

15 August 2016 Page 18. Case: 16-72R?7 08/?5/2016 ID· 10100384 DktEntriL: 1-5 F.'aqe 24 of 55 Nat1onal Bus1ness AJrcrafl7\ssocJa1Jon, e1 i':il v. City ofSantd I'V\onJca, -califoln1a jFAA Docket No. 16-14-04)


### Exhibit 14- Letter from Steven J. Brown, NBAA ChiefOperating Officer to The Honorable Pam O'Connor, Mayor, City ofSantaMonica, dated March 24, 2014.

**Ite~** 

### 2- Notice ofDocketing dated July 17,2014. Item3 --City ofSanta Monica, Motion to Dismiss the Part 16 Complaint ofNational Business Aircraft Association, et al; Memorandum ofPoints and Authorities in Support Thereof[Pursuant to 14 C.F.R. §16,25(a)(b), dated, August 14, 2014]. Includes Exhibits (A) GrantAgreement, Part V, Assurances, (B) Am(;ndments I and 2, and (C) August 12, 2014, SantaMonica Council Meeting, Agenda Item 8-A. Exhibit A- Federal Aviation Administration, Grant Agreement, Part I Offer, to the City ofSanta Monica, California, Sponsordated June 27, 1994, AIP Project No. 3-06-0239-06, ContractNo. DTFAOS-94-C-20857, to the City ofSanta Monica, California, Sponsor. 

### ·1. PartII-Acceptance dateJune 29, 1994 (pageS), signed by officials for the City ofSanta Monica.· 2. Application for Federal Assistance submitted June 15, 1994,by the City ofSantaMonica. 3. Part V ofthe Application for Federal Assistance, the Assurances, Dated October I, 1990. Exhibit B- Amendment No. I to GrantAgreement for ProjectNo. 3-06-0239-06, dated November 8, 1999. Amendment No.2 to GrantAgreementfbr Project No. 3-06-0239-06, dated August 27, 2003. ' Exhibit C -CityCouncil Report, City Council Meeting, August 12, 2014, Agenda Item 8-A, and attestation ofVernice Hankins, City Clerk's Office, that the StaffReport is a true and correct copy of the StaffReport Item 8-A. Item 4- Answer ofthe Complainants to Respondent's Motion to Dismiss, docketed August 28, 2014. Item 5 -City ofSanta Monica's Answerto Complaint, and Supporting Exhibits, dated October 20, 2014. Exhibit 1-

- Federal Aviation Administration, Grant Agreement, PartI Offer, to the City ofSanta Monica, California, Sponsor dated June 27, 1994. AlP Project No. 3-06-0239-06, Contract No. DTFAOS-94-C-20857, to the City ofSanta Monica, California, Sponsor.


### a Part II-Acceptance date June 29, 1994 (page 5), signed by officials forthe City ofSanta Monica. b. Application for Federal Assistance submitted June 

# is, 1994, by the City ofSanta Monica. c. PartV ofthe Application for Federal Assistance, the Assurances, Dated October 1, 1990. d. Current FAA Advisory Circulars for AIP Projects, effective June 1, 1994. Exhibit 2- AmendmentNo. 1to GrantAgreement for ProjectNo. 3-06-0239-06, datedNovember 8, 1999. AmendmentNo.2to Grant Agreement for ProjectNo. 3-06-0239-06, dated August 27,2003

.



### . Exhibit 3- CityCouncil Report, City Council Meeting, August 12,2014,AgendaItem 8-A, and attestation ofa City Clerk's Office, that the StaffReport is a true and correct copy ofthe Staff Report Item 8-A.
15 August 2016 Page 19. Case: 16-7/-R?7 08/?5/2016 ID· .101003?.4 nktEntr\1: 1-5 Pa>J-e ?5 of 55 Natrona! Busrness

**J\~rcralTJ\ss'oCJalion,** efafv. Cify ors-anra'Monrca, califorhra rrAADocket No. 16-14-04)


### Exhibit4

-- Letter from the Manager ofthe City ofSanta Monicato the FAA Airports Program Engineerregarding SantaMonica Airport Grant Amendment for Project No. 3-06-0239-06 (II), dated September 27, 2002, with attachment L Item 6- Reply ofthe Complainants to the Respondent's Answer to

### the Complaint dated October 30, 2014. Item 7- City ofSanta Monica's Rebuttal to the Reply BriefofComplainants, docketed November ]3, 2014. Item 8- FAA's Requestfor Additional Information, dated February 19,2015. Item 9

- Complainants' Response to the request for additional information, dated March 25, 2015. Item 9A- Complainants' Correction to Response to the requestfor additional information, dated March 27, 2015. Item 10- City ofSanta Monica's Responseto FAA'sRequest for Additional Information Declaration, with Exhibit, dated March 25, 2015. Item 11

- Letter from the City to the FAA requestingthe Grant be reopened and to award additional grant money, dated May 7, 2003. · Item 12- Letter from the FAA to the City agreeing to reopen grant and disburse additional grant money, undated copy.

·Item 13- Pinal Construction Report, Airport Improvements, Santa Monica Airport, AlP Project No.3-

06-0239-06 (II). 

### Item 14

- Letter from the City requesting AmendmentNo. I to the grant dated August 2, 1999. Item 15- Santa Monica Airport, Airport Master Record, 5010. Hem 16- Notice ofExtension ofTime to issue the Director's Determination to August 21,2015, dated August 6, 2015. · Item 17 ·Notice ofExtens.ion ofTime to issue the Director's Determination to September 21, 2015, dated August 21,2015. Item 18- Notice ofExtension ofTime to issue the Director's Determination to October 15,2015, dated September 21, 2015. Item 19- Notice ofExtension ofTime to issue the Director's Determination to December 4, 2015, dated October I6, 2015, Item 20 -Director's Determination, dated December4, 2015.

15 August 2016 Page20

### Case: 16-72827, 08/25/2016, 

### ID' 10100384 

### DktEntry: 1-5, 

### Page 26 

### of 55 National Business Aircraft Association, eral v. City or Sanfa Mon1ca, California [f-AA Docket No. 16-14-04) 

### Hem 21A --Respondent City Request for Hearing and Notice ofAppearance, dated December 23, 2015. Item 218 -Complainants' Reply to City ofSanta Monica's Request for Hearing, dated January 6, 2016. Item 21C -FAA Order Denying City's Request for Hearing, dated January 21,2016. Item 22 -Respondent City ofSanta Monica's Notice ofAppeal and Appeal's Brief, dated January 8, 2016. Item 22A -Respondent City ofSantaMonica's Petition to Supplement, dated January 8, 

### 2016, and McCarthy declaration. Item 228 -Respondent City ofSanta Monica's Notice ofFiling, dated January 13, 2016, and Mathieu declaration. Item 23 ·-Notice ofComplainant Name Updates, dated January 4, 20!6. Item 24 -Reply ofthe Complainants to Respondent's Appeal from the Director's Determination and to Respondent's Petitionto Supplement the Record on Appeal, dated January 28,2016. Item 25- Notice ofExtension ofTime to issue the Final Agency Decision to June 15, 2016, dated March 

### 28, 2016. Item 26- Notice ofExtension ofTime to issue the Final Agency Decision to August I, 

### 2016, dated June 22, 2016. Item 27- Notice ofExtension ofTime to issue the Final Agency Decision to August 15, 2016, dated August 1, 2016.

15 August 2016 Page21Case: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 27 of 55



## EXHffiiT2 Director's Determination, NationalBusinessAircraftAssociation, etal. v. City of Santa Monica, FAADocketNo. 16-14-04 (Dec. 4, 2015)Case: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 28 of 55

U.S. Deportment at Tronspor1ation federal Aviation AdminislraHon

December4, 2015


### Via Federal Express
Richard K. Simon, Esq. 1700 Decker School Lane Malibu, CA 90265 Rick Cole City Manager City ofSanta Monica 

### I685 Main Street, Room 

### 209 Santa Monica, CA 90401 manager@smgov

### .net Marsha Moutrie, Esq. City Attorney City ofSantaMonica 1685 Main Street, Room 310 Santa Monica, CA 90401 Ivan Campbell, Esq. Deputy CityAttorney City ofSantaMonica 1685 Main Street, Room 310 Santa Monica, CA 90401 Office ofAirport Compliance and Management Analysis 800 Independence Ave., SW. Washington. DC 20591

Re National Business Aircraft Association, KruegerAviation, Inc., Harrison Ford, Justice Aviation, Kim Davidson Aviation, Inc., Aero Film, Youri Bujko, James Ross, Paramount Citrus LLC and Aircraft Ovmers and Pilots v. City ofSantaMonica, California FAA DocketNo. 16-14-04 Dear Counsel: Enclosed is a copy ofthe determination ofthe Federal Aviation Administration (FAA) with respect to the above-referenced matter. We find that City ofSanta Monicaremains obligated 

### by the grant assurances until August 27, 2023. The reasons for the finding are set forth in the enclosed Director's Determination.Case: 16-72827, 08/25/2016, ID: 10100384, DktEntry: 1-5, Page 29 of 55 2
'!be Director's Determination does not constitute a Final Agency Decision and order subject tojudicial review. [14 CFR § J6.247(b)(2)] A party adversely affected bythe Director's Determination once issued may appeal the initial determinationto FAA Associate Adillinistrator for Airports pursuant to 14 CFR 

### § !6.33(c) within 30 days afterthe service of the birector's Determination. Sincerely, 

### '

## ':1 J / 

# &-**/;:/~i/:2./ -~**  .r:Byron 

### K:lluflin;n'

## ~' ·

Acting Director, 

### Office ofAirport Compliance

and ManagementAnalysis16-72827, 08125/2016, ID: 3 

### CERTIFICATE OF SERVICE

rf\ / t /'\ ,-.. . /

**~··''** 

### IHEREBY CERTIFY that on 

### I

**·""···-~·r·-·/t;t)i**
**·~")** , 

### I caused to be placed inthe United States mail (first class maiL postage paid), a true copy ofthe Director's Determination for FAA Docket 16-13-08 addressed to: Counsel for Complainant JohnR. Copley, Esquire Garofalo Goerlich Hainbach, P.C. 1200

### New Hampshire Avenue, 

### NW Suite 

### 800 Washington, DC 20036
Counsel for Respondent David R. Guin, 

### Esq. Batton& Guin P.O. Box603 107 S. Main Street Louisburg, NC 27549
Hand Deliveredto: FAA Part I6 Airport Proceedings Docket FAAOffice ofAirport Compliance and Management Analysis 

# /,

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. I

. § 

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### ~T;-;'~~lia Roberts

Office ofAirport Compliance and Management AnalysisCase: 16-72827, 08/2512016, ID: 10100384, 

### 31 of



### UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, DC

National Business AircraftAssociation, KruegerAviation, Inc., Harrison Ford, Justice Aviation, Kim Davidson Aviation, Inc., Aero Film, Y ouri Bujko, .1ames Ross, Paramount Citrus LLC and AircraftOwners and Pilots Association Complainants


### v. City ofSantaMonica, California Respondent

DIRECTOR'S DETERMINATION I. 

### INTRODUCTION Docket No. 16-14-04

This matter is before the Federal Aviation Administration (FAA) based on a formal complaint filed in accordance with FAA Rules ofPractice for Federally Assisted Airport Proceedings (FAA Rules ofPractice), Title 14 Code ofFederal Regulations (CFR) Part 16. 1 National Business Aircraft Association, Krueger Aviation, Inc., Harrison Ford, Justice Aviation, Kim Davidson Aviation, Inc., Aero Film, Youri Bujko, James Ross, Paramount Citrus LLC and Aircraft Owners and Pilots Association (Complainants) filed a formal complainant pursuant to Title 14 CFR Part 16 against the City ofSanta Monica, California, (City) owner, sponsor, and operator ofthe Santa Monica Airport (SMO). Complainants allege that the City violated its grant assurance obligations ba<;ed on the City's repeated and continued assertions that such obligations will no longer be in efTect after June 29, 2014. The Complainants' contend that the grant assurances continue 

### Lmtil August 2023. The Complainants seek a determination on the date that the grant assurances expire.

1Enforcement procedures regarding airport compliance matters may be found at FAA Rules o(Practic!Jfor FederallvAssisledAirportEnfOrcementProceedings (14 CFR Part 16). These enforcement procedures were published in the Federal Register (61 FR 53998, October I6, I996) and became effective on December 16, 1996.Case: 

### 0812512016, 10100384, of

Withrespect to the allegations presented in this Complaint, under the specit!c circumstances at SMO as discussed below and based onthe evidence ofrecord inthis proceeding, FAA findS that the City ofSanta Monica is obligated under the grant assurances until August 27, 2023. The FAA's decision in this matter is based on applicable Federal law and FAApolicy, review of the pleadings and supporting documentation submitted by the parties and reviewed by FAA, which comprises the administrative record reflected in the attached FAA Index. 

### H. THE P ARTlES Airport SMO is a public-use airport owned and operated by the City. The 227-acre airport has approximately 269-based aircraft with 452 average aircrail operations per day. The airport is located in a congested air tratllc area and serves as a reliever airport for Los Angeles International Airport, which is located seven miles to the south ofSMO. The airport's runway is 4,987 feet long with 40·foot parallel taxiways onboth sides ofthe runway. The FAAconducted a General Aviation National Asset Study in May 2012 that designated SMO as a regional airport that supports regional economies by connecting communities to statewide and interstate markets.2 The FAA records indicate that the planning and development ofSMO has been financed, in part, with funds providedby FA.A under the Airport Improvement Program (AIP), authorized by the AirpO!i and Airway lmprovement Act of 1982 (AAIA), as amended, Title 49 United States Code (U.S.C.) 

### § 47101, efseq. Between 1985 and 2003, SMO received approximately $9.7 million in Federal airport development assistance. 

### Complainants The Complainants are tenants ofSMO ororgani71ltions with members who are aviation users of the airport. The Complainants desire clarification concerning the expiration date ofSMO's grant assurance obligations as determined by FAA. JFAA Item 1] The following descriptions ofthe Complainants are as provided in the Complaint. The National Business Aviation Association, Inc, (NBAA) is a District ofColumbia corporation that represents the interests ofcompanies that operate aircraft. According to the NBAA, its membership includes more than 10,000 companies that operate aircraft in connection with their business or are othemise involved in business aviation. These entities can or do utilize SMO including but not limited to Krueger Aviation, Inc. and Kim Davidson Aviation, Inc. Krueger Aviation, Inc. (Krueger) is a California corporation engaged in the sale and brokerage of aircrail at SMO, where it has been a tenant for more than40 years. Krueger currently occupies

2 See U.S. Department ofTransportation Federal Aviation Administration, General Aviation Airports: A National Asset, May 2012.
2

### 33 55
approximately 10,000 feet ofoffice and hangar space on two acres that it leases from the Cityon the south side ofSMO. Itleases office and hangar space to seven sub-tenant businesses and maintains tie-down space for approximately 30 aircraft. Harrison Ford is an actor, businessman, and pilot. He has been a SMO tenant for 10 years, basing both fixed-wing (piston andjet) and rotor aircraft in his north-side hangar. Ford has testified before Congress as an advocate for general aviation and regularly flies missions in support ofhumanitarian causes. Justice Aviation, a California corporation, is a full service flight school and aircraft rental facility located on the south side ofSMO. A tenant for 21 years, Justice Aviation currently employs eight flight instructors and maintains between 9 and 1 1 aircraft for instruction and rental. Kim Davidson Aviation, lnc., a California corporation, is an FAA certified Repair Station and a factory authorized Cirrus Aircraft service center located on the south side ofSMO. Ithas been a tenant since 1982, employing a staffof 11. Aero Film is a California limited liability company engaged in the production oftelevision commercials. It is based at SMO, where it maintains offices and a hangar for two aircraft, a Cessna Citation SII and an MD 500 helicopter, both ofwhich are used in its business. Aero Film has been a tenant for ll years. Youri Bujko is the owner and pilot oftwo aircraft, a Mooney Super M20 E and a Cessna Crusader, which he maintains for both business and personal use on the south side ofSMO. He has been a tenant since 2008. James Ross is a recreational flyer who owns a Cessna 170, based in tie-down space on the south side ofSMO. He has been a tenant for 18 years. Paramount Citrus LLC, together with its affiliates, is the largest vertically integrated citrus business in !he United States. Paramount Citrus Aviation, based in Bakersfield, California, is the business department ofthe agricultural based companies owned and operated by Paramount Citrus LLC and its related entities. Paramount Citrus LLC and Paramount Citrus Aviation are jointly referredto herein as "Paramount." Paramount has been a userofSMO for more than 10 years, and logs approximately 235 monthly operations at SMO in support ofits business operations. Parammmt relies on SMO as a vital hub for employee travel to multiple destinations across thewestern United States. The Aircraft Owners and Pilots Association, Inc., (AOPA) is an independent, not-for-profit education and advocacy association incorporated inNew Jersey and headquartered in Frederick, Maryland. According to AOPA, it is the world's largest aviation membership association, representing approximately 370,000 pilots who fly for personal and business reasons. According to AOPA, more than 6,000 ofits members are within a 25-mile radius ofthe City, and many of those members base their aircraft at SMO, including, butnot limitedto, Harrison Ford, Youri Bulko and James Ross. AOPA acts as their representative in this proceeding, consistent with FAA precedent. See
.. e.g., BombardierAerospace Corp. v. City ofSantaMonica, Docket No. 16- 03-11, Director's Determination, at I n.l and 22 (January 3, 2005).
3Case: 16-72827, 08/2512016, 34 55



### HI. BACKGROUND AND PROCEDURAL HISTORY 

### l'rocedmral History Dated July 2, 2014, FAA received a Part 16 Formal Complainant alleging the Respondent violated 49 U.S.C. §47107(a) and airport Grant Assurances. [FAA Item I] Dated July 17,2014, FAA issued the Notice ofDocketing. [FAA Item 2] Dated August 14, 2014, Respondent iiled a Motion to Dismiss. [FAA Item 3] Dated August 28, 2014, Complainant filed an Answer to the Motion to Dismiss. [FAA Item 4] Dated October 20, 2014, Respondent filed the Answer ofthe City ofSanta Monica, California. [FAA Item 5] Dated October 30, 2014, Reply ofthe Complainants to the Respondent's Answer to the Complaint. [FAA Item 6] Dated November II, 2014, Respondent Filed the Rebuttal to the Reply Briefof Complainants. [FAA Item 7] Dated February 19, 2015, FAA Requested Additional Information. [FAA Item 81 Dated March 25, 2015, FAA received information from Complainants based on February request to Respondent for additional information. [FAA Item 9] Dated April 1, 2015, FAA received information from Respondent based on February request to Complainant for additional information. [FAA Item 10] Dated May 7, 2003, Letter from the City to FAA requesting the Grant be reopened and to award additional grant money. [FAA Item II] Undated Letter from FAA to the City agreeing to reopen the grant and disburse additional grant money. [FAA Item 121 Final Construction Report, Airport Improvements, Santa MonicaAirport, AlP Project NoJ-06· 0239-06 (ll). [FAA Item 13] Dated August 2, 1999, Letter from the City requesting Amendment No. Ito the grant dated August 2, 1999. [FAA Item 14] Santa Monica Airport, Airport Master Record, 5010. [FAA Item 15] Dated August 6, 2015, Notice ofExtension ofTime to issue the Director's Determination to August 21,2015. [FAA Item 16]
4Case: 

### 35 55

Dated August 21,2015, Notice ofExtension ofTime to issue the Director's Determination to September 21,2015. [FAA Item 17] Dated September 21,2015, Notice ofExtension ofTime to issue the Director's Determination to October 15,2015. FAA Item 18] Dated October 16, 2015, Notice ofExtension ofTime to issue the Director's Determination to December 4, 2015. [FAA Item 19] Factual Background SMO is a 227-acre airport located in a highly congested air traffic area, and is an important reliever airport for the Los Angeles International Airport 

### (LAX), which is locatedjust 

### 7 miles to the south. As a reliever for LAX, SMO serves a vital and critical role as a general aviation reliever airpmtby diverting aircraft away from the aircarrier**airporl~** and other more heavily used airports located in the Los Angeles area. SMO serves the role of

### abusiness airport capable ofaccommodating a wide range ofbusiness and personal aircraft, including corporate and businessjets. The City and FAA entered into a Settlement Agreement on January 31, 1984, (1984 Agreement) setting forth the terms and conditions under which the City would continue to operate SMO. Under the Agreement, the City agreed to operate and maintain SMO without derogation ofits use as a reliever airport until July I, 2015. The 1984 Agreement, by its terms, did not address obligations after its expiration nor did it release the City from its AlP Grant or Surplus Property Act obligations. Relevant GrantHistory On June 29, 1994, the City applied for and accepted an AlP grant from FAA for $1,604,700 for planning, airport development, ornoise program implementation. [FAA Item 3 exhibit A, 2] The grant was issued in 1994 under AlP Grant No. 3-06-0239-06. The projects under the grant were completed intwo phases. The Final Construction Report, Airport Improvements, SantaMonica Airport, AlP Project No.3-06-0239-06 provided the timing for phase 

### I. [FAA Item 13]

• Bid Opening- October 2, 1995 • Preconstruction Conference- February 5, 1996 • Work Started (Construction)- March 6, 1996 • Work Substantially Completed (Construction)- June 11, 1996 • Final Inspection- August 23, 1996 By letter dated August 2, 1999, the City asked to amend Grant No. 3-06-0239-06 to reflect modifications to the original scope ofwork under Phase L The letter indicated that the 

### "request
5Case: 

### 16-72827, 0812512016, 10: 

### 10100384, 36 55

wouldnotresult in a change in the totalproject budget cost under the gran/
.., [FAA Item 14] On November 8, 1999, The City executed Amendment No. l. [FAA Item 5 exhibit 2] By letter dated September 27, 2002, the City requested to amend GrantNo. 3-06-0239-06 (II) to "increaseparticipation amount by $240,600 to a total of$7,845,300 to**r~flect** increasedcost andchangedconditions that occurredduring construction. "' [FAA Item 5 exhibit D] FAAreplied to the City and indicated that the 1994 grant was "f1nancially and administratively closed." [FAA Item 12] On May 7, 2003, the City submitted a second letter renewing the request for additional funds for the project. Notwithstanding that this request was being withheld pending the outcome ofan FAA Notice ofInvestigation, the City "implore[d] the FAA to reconsider this matter and approve" the amendment. [FAA Item II] FAA agreed to "reopen the grant to amendthe gran/ agreement, thereby increasing the maximum U.S. obligation. " [FAA Item 12] Accordingly, FAA offered the City a grant amendment that increased the Federal obligation to $1,845,300. The City accepted the offer on August 27, 2003. [Item 5 exhibit B] The amendment provided, in part, The maximum obligation stated on Page 2, condition 1, is hereby increased by $240,600.00, from $1,604,700.00 to $1 ,845,300.00. All other terms and conditions ofthe Grant Agreement remain in full force and effect. The Final ConstructionReport, Airpmt Improvements, Santa Monica Airport, AlP Project No.3- 06-0239-06 (II) provided the timing for Phase II as follows: [FAA Item 13]

• Bid Opening- July 30 and August 3, 2000 • Project Award- June 24,2001 • Pre-construction meeting- August 16, 2001 • Work Started (Construction)- September 24, 2001 • Work Substantially Complete (Construction)- February 20, 2002 • Final Inspection- March 27, 2002 IV. APPLICABLE FEDERAL LAW AND FAAPOLICY The Federal role in civil aviation is augmented by various legislative actions that authorize programs for providing Federal funds and other assistance to local communities for the development ofairport facilities. In each such program, the airport sponsor assumes certain obligations, either by contract or by restrictive covenants in property deeds and conveyance instruments, to maintain and operate its airport facilities safely and efficiently and in accordance v;ith specif1ed conditions. Commitments assumed by airport sponsors in property conveyance or grant agreements are important factors in maintaining a high degree ofsafety and efficiency in airport design, construction, operation and maintenance, as well as ensuring the public fair and reasonable access to the airport.



### 6

### 37 55



### A. The Airport Improvement Program (AlP) Title 49 U.S.C., §47101, etseq., 

### provides for Federal airport financial assistance for the development ofpublic-use airports under the AIP established by the Airport and Ainvay ImprovementAct of 1982, (AAIA) as amended. Title 49 U.S.C., §

### 47107, eT seq., 

### sets forth assurances to which an airport sponsor agrees as a condition ofreceiving Federal financial assistance. Upon acceptance ofan AlP grant, the assurances become abinding contractual obligation between the airport sponsor and the Federal Government. The assurances made by airport sponsors in AlP grant agreements are important factors in maintaining 

### a viable national airport system. B. 

### Airport Sponsor Assurances As a condition precedent to providing airport development assistance under AlP, 49 U.S.C., 

### § 47107, et seq., 

### the Secretary ofTransportation and, by extension, FAA must receive certain assurances from the airport sponsor. Title 49 U.S.C., § 47107(a) sets forth the statutory sponsorship requirements to which an airport sponsor receiving Federal financial assistance must agree, FAA has also identified assurances that arc necessary to carry out the program. The FAA has statutory authority to enforce compliance with the sponsor assurances. FAi\

### Order 5190.6, FAA Airporr Compliance Manual 

### (Order), provides the assurances for sponsors and policies and procedures to be followed by the FAA in carrying out its functions related to compliance with Federal obligations ofairport sponsors. The FAA considers it inappropriate to provide Federal assistance for improvements to airports where the benefits ofsuch improvements will notbe fully realized for the duration oftheir usefu1life or due to inherent restrictions on aeronautical activities. Assurance (B)( I), 

### which addresses the duration ofthe grant assurances, provides: The terms, conditions andassurances of the grantagreementshall remain infull force and**~/feet** throughout the useful life of thefacilities developed or equipment acquiredfor an airportdevelopment or noise compatibilityprogramproject. or throughout the useful life of theproject items installedwithin afacility under a noise compatibilityprogramproject, but in any event not to exceedtwenty (20) years from the date of the acceptance ofagrant offer ofFederalfundsfor the project. However, there shall be no limit on the duration of the assw·ance against exclusive rights or the terms, conditions, andassurances with respect to real property acquiredwith Federalfimds. Furthermore, the duration of the Civil Rig,hts assurances shall be as specifiedin the assurance. 

### V. ANALYSIS AND DISCUSSION Motion to Dismiss 

### The City filed a motion to dismiss based on (1) the Complaint failed to state a claim because it does not state a "specific provision" ofthe Act that the City has violated, (2) the Complainants Jack standing, (3) FAA lacksjurisdiction to grant the reliefrequested, and ( 4) the Complainants
7

### 38 55



### failed to engage in good faith efforts to resolve this matter informally. The City filed its motion on August 18,2014, and the City's motion remains pending. Accordingly, the City filed its answer. 14 CFR § 16.26(b)(5). The Director hereby denies the motion for the reasons set forth below. Failure to State a Claim The pleading requirements for Part 16 are set forth in § 16.23 requiring the Complainant to state, "the specific provisions ofeach Act thatthe Complainant believes were violated." An "Act" is defined to include a grant assurance. 3 

### The Director agrees that the Complaint is not clear in terms ofthe specific Act violated. Nevertheless, the provision is notjurisdictional and to the extentthe Director can understand the basis ofthe Complaint, dismissal is not mandatory. ln

### this case, the Complainants have asked the Director to clarify the expiration date ofthe grant assurances. The expiration date is set forth in assurance (B)(l). 

### The Complainants argue the assurances remain in effect until 2023. The City contends they expired in June 2014. [FAA 

### Item 1] FAA construes the Complaint to argue that the City's interpretation violates and/or undermines the grant agreement as 

### a whole and, in particular, grant assurance (B)(!) 

### both ofwhich are "Acts." The City argues that regardless ofits position on the expiration date, it has "not committeda violation of anyActor GrantAssurance, nor has the City failed to take action that it is required to take under anyAct or GrantAssurance. " 

### [FAA Item 3 

### page 

## 3J However, the City has made clear in its answer that it 

### regards its grant obligations to the FAA to have ended on June 29, 20

### J 4. [FAA Item 5 

### page IS] 

### For purposes ofthis motion to dismiss, we 

### assume, without here deciding, thatthe Complainants' expiration date is correct. Kowal v. MCJ Communications Corp., !6 

### F.3d 1271, 1276 

### (D.C. 1994) (on motion to dismiss, Complaint is construed liberally and plaintiffgranted the benefit of

### all inferences than can be derived from the facts alleged). The City's statement then constitutes a repudiation ofthe contract. Grant assurances are both contractual and statutory in nature, and contract law may guide FAA decisions. City andCounty of San Francisco v. FAA, 

### 942 F.2d 1391, 1396 (9'11 

### Cir. 1991). Both California and 9'h Circuit case law support the position that where a sponsor has expressly repudiated the grant agreement, FAA need not wait for an actual instance ofnonperformance to occur before addressing the issue. Taylor v. Johnston, 

### 539 P.2d 425,430 (Cal. 1975); First National Mortgage Co. v. FederalRealty Investment Trust, 

### 631 F.3d I058, I069 (9111 

### Cir. 2011); see also Roehm v. Horst, 

### 178 U.S. 1, 19 (1900). This reasoning is particularly persuasive when the remedy sought is limited to establishing whether the grant obligation is currently in effect and when it expires.

3 "Act" is defined as "astatute listed in § l6.1 and any regulation, agreement, or document ofconveyance issued or made underthatstatute." 14 CFR § 16.3 (emphasis provided). The Airport and Airway Improvement Act of 1982, 49 U.S.C. §471 OJ etseq., as amended and recodified, is a listed statute. 14 CFR § 16.1(a)(5). The grant assurances are part ofan "agreement ... made under that statute," and thus constitute an "Act" under Part 16. 

### 8

### 55


### Finally, the determination ofwhether a sponsor is reasonably meeting its Federal obligations is a "judgment calL" FAA Order 5190.6b, ,[ 2.8(c). An importantelement ofcompliance is that "[the] federal obligations are fully understood." Id. 

### This case involves notjustthe understanding ofa particular assurance, but whether, as Complainants argue, any assurances apply at all. [FAA Item 4 page 7] A determination on whether the assurances are in effect therefore assures both current and future compliance. Although we "Will not consider future events or consequences under Part 16, the issue here posed is one in dispute now. Moreover, we may in limited circumstances, consider a case where the current situationportends the high likelihood ofa future violation. See JetAwayAviationLLCv. Montrose County, 

### Docket No. 16- 06-01, Director's Determination at 34 (Nov. 6, 2006). We find that the Complaint is adequately pleaded and the Director is readily able to determine which "Acts" the Complainants claim are violated. The City has clearly declared what it considers the expiration date ofthe grants to be, and the Complainants allege the City is wrong. 

### Ifthe date proffered by the Complainants were correct, the City's declaration would constitute an express repudiation ofthe contract. FAA ±1nds that in the unusual case in which the sponsor expressly and unequivocally declared that the grant agreement expired, and where a reasonable counterargument exists, it is well within FAA's authority to rule upon this limited but threshold issue by clarifying the expiration date. We decline to dismiss this Complaint on the grounds that it fails to state a claim. 

### Standing To have standing under 14 CFRPart 16, a party must be "directly andsubstantial(v affectedby 

### any allegednoncompliance
.., The Complainants include tenants and users ofthe airport, all of whom allege they will be directly and substantially affected ifthe City is not grant obligated. [FAA Item 

### I pages 

### 2-3] For instance, the Complaint alleges that Krueger Aviation, Inc. is engaged in the sale and brokerage ofaircraft at SMO and has been a tenant for 40 years. It leases approximately l0,000 feet ofoffice and hangar space from the City on the south side of SMO. ComplainantNational Business Aviation Association (NBAA) represents companies that operate aircraft for 

### business purposes. These members include Krueger among others. With the exception ofNBAA, the Complainants pay fees (including landing fees) and/or rent to the City for use ofSMO. FAA finds that the Complainants are directly and substantially affectedby the City's stated positionthat its grant obligations have expired. For a motion to dismiss we construe the Complaint in favor 

### ofthe Complainants and note that the Complainants have pied that the City, but for Federal obligations, would likely close all or part ofthe airport. It is the City's stated view, ongoing litigation notwithstanding, that most ifnot all ofthese obligations ended in July 2015. FAA finds Complainants' concerns to be reasonable based upon directions the City Council has provided to City staff(i.e. directing studies ofpotential closures) and a City Resolution, passed in 1981 but never rescinded, that states the policy ofthe City is to close the airport. [FAA Item 1 page 6] In addition, the City is currently appealing an order dismissing a case in which the City challenged its Surplus Property Act (SPA) obligations. In that case, the City sought an order
9of

''that the UnitedStates shall cease anddesistfi·om takingany action to require Santa Monica to operate the AirportProperty as an airport after the !984Agreement expires in July of 2015. " 

### [FAA Item 1

### exhibit 8] In the unique context ofthis case, FA.A. 

### finds that the Complainants are harmed by the uncertainty involving the grants. Assuming the Complainants are correctthat the assurances will expire in 2023, that would still provide an additional 8 years during which Complainants, regardless ofhow Surplus Property Act issues are resolved, could rely upon the airport remaining open in conformance with the assurances. The assurances provide uniform standards under which to operate that protect the investment ofthe United States and the rights ofusers and tenants. These include the fundamental assurance that the airport will be open for public use on reasonable terms. AssLU11ing the assurances are in fact in effect, !be stability and fundamental ground rules the assurances create are undermined by the City's repudiation, particularly given the current position ofthe City Commission, which, regardless ofwhetherthe Council has taken action yet, appears to lean towards a full or partial closure4 

### We find the Complainants are directly and substantially affected by the uncertainty ofthe grant expiration date and have standing to bring this Complaint seeking clarification ofthat date. Jurisdiction 

### Part 16

### jurisdiction is established by 14 

### CFR §16.1. 

### Section 16.

### I provides: The provisions ofthis part (16] 

### govern all Federal Aviation Administration (FAA) proceedings involving Federally assisted airports
...instituted by
... filing a complaint with FAA under the following authorities. Among the listed authorities are "[t]he assurances and other Federal obligations contained in a grant-in-aid agreement issued underthe Airport and Airway Improvement Act of 1982 (AA!A), as amended and recodified, 49 U.S.C. 47107 

### et seq., specifically section 51l(a), 

### 49 U.S.C. 47107, 

### and 49 

### U.S.C. 47133." 

### The FAA is responsible for enforcing !be grant assurances. Any action that is contrary to the sponsor's grant assurances is within the scope ofFAA to review and address. When information contained in the administrative record to a Part 16 

### complaint leads the agency to review areas of noncompliance

- whether or not !bey are alleged by the Complainant- the agency will, nonetheless, make a finding on those areas. Seefor example, M Daniel Carey and Cliff Davenport v. Afton-Lincoln County MunicipalAirportJoint Powers Board, 

### FAA DocketNo. 16- 

### 06-06, (January 19, 

### 2007) (Director's Determination), Issue 7. All potential grant assurance violations are within the scope ofF AA to review and address, whether alleged in a Part 16 

### complaint or identified through any other means. See BostonAir Charter v NorwoodAirporr

"See March 25, 2014, City Council Meeting minutes FAA Item 1page 6 and exhibit 6. Also, see City Council meeting minutes dated October 27, 2015 ("direct staffto look at commencing the CEQA visioning process to do things with the airport other than current

**uses~~).**
10Case: 72827, 08/25/2016, ID: 10100384, 41 55

Commission, Norwood, Massachusetts, f"AA DocketNo. 16-07-03 (August 14, 2008) (Final Decision andOrder),pages 26-27. 

### Section 16.1 is very broad and conveysjurisdiction where a complaint is filed under any ofthe listed authorities. Here, the Complaint has been tiled under the authority of"[t]he assurances and other Federal obligations contained in a grant-in-aid agreement issued under the Airport and Airvvay Improvement Act of 1982 (AAIA)." Therefore, we findjurisdiction exists. Failure to 

### Engage in Good 

### Faith Effort to Resolve The City argues that the Complainants have failed to engage in good faith efforts to resolve this matter informally as required by 14 CFR § 

### 16.21. The Complainants counter that they have exchanged letters with the City on this subject ofthe Complaint. Complainants' letter ofJune 11,2014,raises the issue ofthe grant expiration date and oilers 

### to meet with the City and to utilize a mediator. [FAA Item I 

### exhibit II] 

### The Deputy City Attorney's reply, in the final sentence, informs Complainants' counsel that should he wish to discuss this ftuiher, "you are welcome to contact me." 

### [FAA Item 1

### exhibit 12] Despite this offer, the City's response does not directly respond to Complainants' concerns and does not respond in any credible way to the Complainants' offer to meet or mediate. The letter merely states that "regardless(){when the GrantAssurances expire
. .. years of formal and informalprocesses andproceedings lie ahead " 

### [FAA ltem I exhibit 12] As both parties point out, the status ofSMO 

### is a contentious issue that has been the subject ofsignificant past and present litigation. The expiration date itselfhas been disputed since at least 201 1. City ofSantaMonica v. FAA, 

### 631 

### F.3d 550, 552 (D.C. 2011). The City's position on the expiration date is clear and unlikely to be voluntarily reversed. The Complainants are not required to conduct continued informal resolution efforts when it appears clearthat the City's position on the expiration date is longstanding and fixed. Accordingly, the motion to dismiss is denied on all grounds. VI. Issue Whether the City's GrantAssurance obligations expired on June 29, 2014 orexpire on 

### August 27,2023. 

### The Legal Effect ofthe 2008 Director's Detenninationln re City ofSanta Monica, CA At issue in this case is the expiration date ofthe City's AlP grant obligations. The Complainants argue that: "this issue already has been the subject ofan FAA ruling pursuantto Part 16. In re City ofSanta Monica, California, docket nos. 16-02-08/FAA-2003-15807, FAA explained: In 2003, the City requested, and FAA approved a grant amendment for $240,600, increasing
II

### Case: 16-72827, 0812512016, 10: 

### 10100384, 42 55

its AlP grant total to $10.2 million
... This was the last AlP-funded project at SMO to date. As a result, SMO is obligated under its AlP grant assurances until at least 2023. Director's Determination, at 13 (May 27, 2008) (emphasis added; footnote and citation omitted)." The Complainants "concur with the FAA'sposition as statedin the Director's Determination, andurge FAA to maintain thatposition in thisproceeding." 

### [FAA Item 6 

### page 6]. 

### In contrast, the City contends, "there has never been an administrative "ruling" by FAA that the City is obligatedby itsAlPgrant assurances until 2023. " 

### The City states that the issues in the prior Directors Determination had nothing to do 

### with the expiration date ofthe grant assurances. [FAA Item 7 

### page 2] The 

### date was at issue in administrative litigationthat culminated in 

### a 

### ruling from the U.S. Court ofAppeals for the DC Circuit. See City of Santa Monica v FAA, 

### 631 F.3d 550 (DC 2011 ). In that case, the court found that it could resolve the material issues without determining the grant expiration date, which it noted remained disputed. !d. at 552. The FAA accordingly accepts the City's contention that the 2008 administrative determination is not dispositive, and this Director's Determination constitutes a 

### fresh examination ofthe issue based on the record before us now. The Expiration Date is determinedby the earlier ofthe Useful Life ofthe project and the NotTo-Exceed Date ofNo More Than 20 Years from Acceptance ofthe Grant Offer The FAA may approve a project grant application "only if" it receives written assurances "satisfactory to the Secretary." Title 49 U.S.C. §47!07(a). To modify the assurances orto require compliance with an additional assurance, FAA must publish notice in the Fedem! 

### Register and provide an opportunity for comment. Title 49 U.S.C. §47017(a). The assurances in effect at the time the City ofSantaMonica entered into its grant, on June 27, 1994, were noticed in the Federal Register on February 3, 1988. 53 Fed. Reg. 3104 (Feb. 3, 1988). Between February 3, 1988 and June 27, 1994, fAA amended the grant assurances twice. Neither affected the provision on duration.5 

### These covenants are not contractual terms open to negotiation, but vital legal requirements imposed by statute. "The conditions Congress imposedon the grant to localairportproprietors of money from theAirportandAirway Trust Fundare designed inpart to insure the maintenance of conditions essential to an efficient national air transportJystem, includingaccess to airports on a reasonable andnondiscriminatory basis. " City andCounty of'San Francisco v. FAA, 

### 942 F.2d 1391, 1395 (9'h Cir. 1991).

5 See 53 Fed, Reg. 3436! (Sept. 6, 1998); 54 Fed. Reg. 35748 (Aug. 29, 1989); A change noticed on June 10, 1994 also did not affectthe duration provision, and in any event only took effect on July II, I994, so it does not apply to the assurances as they existed onJune 27, 1994. See 59 Fed. Reg. 30076. 

### 12Case: 16-72827, 08/2512016, ID: 10100384,

The Duration ofthe Grant Assurances Fall into Three Categories The duration ofthe assurances is provided in the assurances themselves. The assurances fall into three categories in terms ofduration. first are the assurances for which there is "no limit" on duration. These assurances never expire so long as the airport is operated as an airport. Included inthis category are "the assurances against exclusive rights [and] the terms, conditions, and assurances with respect to real property acquired with Federal funds." Grant Assurance (B)(!) Second are the civil rights assurances the duration ofwhich is specified in the assurance themselves. Generally, the civil rights assurances also extend to the period during which the airport is used as an airport. Third, are all the other remaining assurances. The date that this order seeks to determine applies to the third category. Assurance (B)(!) provides: The terms, conditions and assurances ofthe grant agreement shall remain in full force and effect throughout the useful 

### life ofthe facilities developed or equipment acquired for an airport development or noise compatibility program project, or throughout the useful life ofthe project items installed

**v.~thin** a facility under a noise compatibility program project, but in any eventnot to exceed twenty (20) years from the date ofthe acceptance ofa grant offer offederal funds for the project However, there shall be no limit on the duration ofthe assurance against exclusive rights orthe terms, conditions, and assurances with respect to real property acquired vvith federal funds. Furthermore, the duration ofthe Civil Rights assurances shall be as specified in the assurance. Assurance (B)(!) does not provide a time-certain date on which the assurances expire, but rather provides the methodology for detenniningthat date. The issue in this matter arises because onAugust 27, 2003, the parties executed an amendment that increased the Federal grant amount by $240,600.00. At issue is the significance ofthis amendment. Complainants argue that when the City accepted $240,600 ofadditional funds in 2003 it extended the not-to-exceed date to 2023. [FAA Item 3 exhibit B] The useful life for this project For the assurances at issue here, the expiration date is provided by the methodology specified in Assurance (B)(l). Under (B)(!), the expiration date is a function ofuseful life, but is capped by a not-to-exceed date that is tied to the date the sponsor accepted an offer ofFederal funds. Thus, there are two dates at play. In this Determination, we

**v.~ll** refer to these dates as the not-toexceed date and the useful 

## lite date.



### 13

### 44 55

For useful life (B)(!)provides, the grant agreement shall remain in full force and effectthroughout the useful 

## life ofthe facilities developed or equipment acquired for an airport developmentor noise compatibility program project, or throughout the useful life ofthe project items installed within a facility under a noise compatibility programproject
... Useful life commences from the pointthat the improvement is placed in service. There is no disagreement among the pruties on when useful life commenced for this project The parties agree that grant AmendmentNo. 2 funded a blast walL They similarly agree that the wall was submitted for final inspection on March 27, 2002, and having passed final inspection, that is the date it was put into service. Based on the consensus position ofthe parties, FAA agrees that the blast wall was placed in service on March 27, 2002. With the service date determined, we now tumto useful life. The FAA's presumptive useful life is 20 years. 6 The City has provided no position or opinion on the useful life ofthe blast wall, butthe engineer notes that approximately 13 years ofservice have produced no apparent wear. 7 [FAA Item l0] The Complainants suggest a useful life in excess of25 years. This position is based on the opinion ofa civil engineer, hired by the Complainants, who inspected the wall in 2015. This engineer notedthat a similar blast wall at Bob Hope Airporthas been in service for at least 30 years. The engineertestified that he had prior experience and responsibility with regard to the "condition and potential ofairport structures." Declaration ofLeopold Klabbers. [FAA Item 9] A similarblast wall at Bob Hope Airport was part ofthe structures !orwhich he had responsibility and he testified that he also had a role in a "slight[] modifijcation]" to the wall that occurred shortly after its construction. Weighing all the testimony and particularly notingthe static nature ofthe blast wall, the testimony ofan engineer experienced with such walls, the useful life ofa similar wall, lack of any apparent wear, and no contrary position set forth by the City, we accept the position ofthe Complainants and find the blast wall to have a useful life of25 years.8 As the maximum duration ofthis assurance is 20 years from the date ofacceptance ofthe grant used for this project, that date rather than the longer useful life date governs. Thus, the useful life ends onMarch 27,2027.

6 FAA Order 5190.63, p.4-3. 7 The City provided testimony ofacivil engineer in its Public Works Department, butthe engineer concludes thathe does not know what the useful life is. Th.e engineer did note that the blast wall "appears ro be in a similar condition" from when "it was installedandbegan its usefitllife 13 years ago in 2002."
8 Complainants actually argue for auseful life in excess of25 years, but fail to support or adequately limit such an open-ended assertion.
14Case: 16-72827, 0812512016, ID: 10100384, 

### 45 55

Not to exceed date In determining the expiration date, (B)(I) provides that the expiration dates arc "not to exceed twenty (20) years from The date of the acceptance of a grant offer of Federal fondsfor the project." 

### Upon acceptance ofan offer ofFederal funds for an AlP project, the assurances become a binding contractual obligation between the airport sponsor and the Federal Government. On June 29, 1994, the City ofSanta Monica accepted an AlP grant for a project at SMO. The grant agreement attached the standard set ofgrant assurances. Had nothing else happened, the not-to-exceed date for the grant assurances would have been June 29, 2014, the date that the City argues is, in fact, the actual expiration date. Complainants, however, observe that this is not the last date on which grant funds were accepted by the City. On September 27, 2002, the City Manager wrote to FAA and indicated thatthe City "requests to amendthe Federal Grant for Project No. AlP 3-0600239-06(11) to increase participation amount by$240,600 to a total of$1,845,300 to reflect increasedcosts and changed conditions which occurredduring construction." 

### [FAA Item 5 exhibit 4] This was a 15 percent increase to the original amount ofthe grant. According to a subsequent letter from the City dated May 7, 2003, the City's request was not approved due to an ongoing FAA investigation. In addition, FAA considered the grant closed as ofOctober 19, 2001. [FAA Item 12] The May 7, letter reiterated the City's request for additional funds and "implore[ d) FAA to reconsider this matter andapprove the requestedgrant reimbursement so the.funds can he usedto enhance andmaintain the Santa Monica Airport. " 

### The letter indicated that the "requestedreimhursementfunds represent a substantial amount of revenue that couldbe utilized for much-neededanddiffered airfieldmaintenanceprojects. '·" 

### [FAA Item 11

## J Based on this letter, FAA wrote to the City and agreed to "reopen the grant to amendthe grant agreement, thereby increasing the maximum 

### US. obligation" 

### [FAA Hem 12] On August 27, 2003, FAA and the City executed "Amendment No.2 to Grant Agreement for ProjectNo. 3-06-0239-06." The amendment provided "in consideration ofthe**ben~fits** to accrue to theparties hereto" 

### the parties "mutually agree that saidGrantAgreementbe andis hereby amendedas follows: The maximum obligation
... is hereby increasedby $240.600.00

.... " 

### The amendment did not have its own provision on the expiration date but provided that "[a]ll other terms andconditions of the [original} GrantAgreement remain infullforce andejfect." 

### [FAA Item 3 exhibit B] Complainants argue that when the City sought and accepted $240,600 ofadditional funds in 2003, a 15 percent increase from the original grant, it extended the not-to-exceed date to 2023. [FAA Item I page 7] The City argues that the original 1994 grant agreement governs the expiration date and that under that agreement upward and dovmward adjustments in the grant amount were contemplated, and that nothing suggested that "additionalphases or amendments to the Agreement or thefinal audit" 

### would constitute a separate agreement that would restart the notto-exceed date. [FAA Item 5page 18] 15

### 16-72827, 08125/2016, 10100384,



### The City also states that, "lhe City's very, reasonable interprelation of the contract taken from the plain andexpress language within/he four corners of those documents must control and, therefore, the FAA'sdetermination must be that City's obligations endedpursuant to the Agreement in June 2014
. . , 

### [FAA Item 5 page 4] Additionally, the City asserts that ifthere is any ambiguity in the documents then "both.federal andstate law dictate that such ambiguity must be interpretedagainst the drafter of the contract." 

### [FAA Item 5 pages 4 and 5] Consideration for the Second Amendment 'fhe Director disagrees with the City's assertions. Unlike the first amendment to the grant, changing the description ofworkbut adding no funds, the second amendment involved an additional significant obligation offederal funds and no 

### additional work performed or benefitto the public otherthan from the extension ofthe grant covenants. All AlP grants require that the cost ofthe project be shared between the Federal Government and the airport sponsor, Title 49 U.S.C. 47109. This section oflaw requires that the airport sponsor, the City in this instance, absorb a 

### minimumpercentage ofthe costofthe project The agency is in no way obligated to provide increased funding ifthere is an ovemm; on the contrary, grant recipients should expectto cover such overruns as part ofits contributionto the project. Instead, in this instance the grant recipient requested the additional funds in order to free up resources for other airfield maintenance projects. The City makes a number ofarguments based on standard principles ofcontract law, but ignores the most fundamental principle ofcontract law- the need for an exchange ofconsideration. This principle applies to grant agreementsjust as much as to procurement contracts. See, 

### e,g, Jackson v. Birmingham Boardof Education, 

### 544 U.S. 167 (2005). In this matter, the work for which the 1994 grant had been provided had been completed and the grant closed. The City realized it had incurred an overrun, and implored FAA to provide additional funding. The FAA agreed to do so, and provided the funding. It is clearwhat consideration FAAprovided, additional timding. The only consideration for the amendment provided by the City, however, would be the continued applicability ofthe grant assurances using the date ofthe si&med second amendment as the starting date. Adherence to the conditions Congress sets in exchange for receiving grant funds has repeatedly been held to be the necessary consideration for the contract that is a grant agreement. ld, see also, PennhurstState SchoolandHospital v. Halderman, 

### 451 U.S. l, 17 (1981 ). Simply continuing to adhere to the grant assurances using the date ofthe award ofthe original grant would provide no new consideration to support the additional funds provided. The Second Amendment was a new obligation akin to a new grant The City argues that there was nothing to indicate that the second amendment would have the effect ofextending the expiration date ofthese assurances, orbe the equivalent ofa new grant

16

### 47 55



### The second amendment, however, bore every indiciabut one ofbeing a new contract: the old granthad been closed; the second amendment was mutually agreed to and signed by both parties;9 

### there was an offer, acceptance and an exchange ofconsideration. Underthese circumstances, the Government Accountability Office has held that the funds provided for the amendment are for 

### in essence the award ofa new grant. 41 Comp. Gen. 134 (1961). 10 

### The only arguably contrary indicator was the agreement that the tenns and conditions ofthe original grant would remain in torce. 11 As 

### the scope ofwork for which the funds were provided was unchanged, and the assurances are statutory requirements the lanhrnage orwhich does not change from grant to grant, this statement is neither surprising nor incorrect. It

### is the amount ofthe grantthat was enlarged ratherthan the scope ofwhat the grant was for. When a grant is enlarged beyond the 

### scope ofthe original such that anew financial obligation is made, it 

### "must be considered as giving rise to a new grant." 39 

### Comp.Gen. 296, 298 (1959). 12 The City understood the requirements of the statutorily requiredgrant assurances 

### The City argues, in essence, that there was no meeting ofthe minds for the second amendment. The City Manager and the City Attorney executed this amendment on August 29, 2003. The amendment was 

### signed during a period in which there was an ongoing FAA investigation13 

### of the City's ban on categol)' C and D aircraft- aban that FAA alleged, and which the U.S. Court ofAppeals for the D.C. Circuit affirmed, violated the very assurances here at issue. City of Santa Monica v. FederalAviationAdministration, 

### 631 F.3d at 559 (D.C. Cir. 2011). Moreover, in prior attempts to close the airport or to consider closing the airport, the City was reminded in formal opinions from both the City Attorney and the CaliforniaAttorney General
()Typically. purely adminisu·ative changes to an agreement can be signed only by the Government and do not require mutual agreement. See 48 CFR 43.1 03(b) (this particular regulation concerns procurement contracts, but demonstrates the general distinction between bilateral and unilateral changes). 10 GAO focuses on the requirement in these circumstances to use funds current in the yearthe amendment is made rather than funds current in the year the original grant was made. The AlP is funded e-ntirely with "no year'' funds, i.e., funds available until expired, so it is not possible to compare the funds used when the second amendment was made to the funding used when tl1e grant was originally awarded. Itis the principle that underthese circumstances the second amendment is in essence anew grant, rather than the type offunds used, which is relevant to this decision. In this particular GAO decision, additional funds were needed to complete the work, so completion ofthe work was sufficient consideration for the additional funds. In the matter at hand,**however~** the work had already been completed, and thus the need fbr additional consideration. 11 The City also mentions the fact that the grant numberremained the same. {FAA Item 5page 19]. The same grant number was used because the funds were for work already completed under that grant number. The Director finds that the use ofthe same AlP grant number for the second amendment does not obscure the fact that anew obligation offunds were made, consideration for which was an extension in the applicability ofthe grant assurances. "Another GAO case establishes the principle that ifthe bona fide need for the project remains the same, the purpose ofthe grant remains the**,~arne** and the scope ofthe project remains the same, then the amendment is not equivalent to a new grant. 58 Comp. Gen. 676 (1979). Here, the purpose and scope ofthe projecl remained the same, butthe bonafide need had already been met. The work had been completed, but additional funds beyond what had been originally agreed to were provided. 13 See Letter from Bob Trimborn, Airport Manager to William Withycombc, FAA Regional Administrator (May 7, 2003) (reference FAA's Notice ofInvestigation, Docket No. 16-02-08). 

### 17Case: 08/25/2016, ID: 10100384,

that Federal funding comes with reciprocal obligations that require the airport to remain open. 14 Because ofthe controversy that surrounded the City's Federal obligations both at the time ofthe amendment and well before, the Cityknew or should have known that by seeking, and accepting additional Federal funds, congressionally mandated assurances would continue to apply. As the City offered no other consideration for the significant increase in funds, it knew or should have known that acceptance ofthese new funds would restart the date ofthatthese assurances would apply. Settlement Agreement The City's argumentthat its intent is**con~o>ruent** with the Settlement Agreement is also rejected. The Agreement itselfmakes clear that only those grant agreements executed prior to July 1, 1995 would not extend or alter operational obligations. Settlement Agreement, p. 8-9. The amendment at issue here isfrom 2003. Moreover, the Settlement Agreement itself acknowledged that Federal statute would control. 

### [!d. at 

## 91 That statute, 49 U.S.C. 47107, requires compliance with the relevant grant assurances for a period ofnot more than 20 years from t11e date the grant was accepted. As the second amendment was a new obligation offunds without a commensurate increase ofscope ofthe grant, otherthan from an extension inthe grant assurances, it is reasonable to interpret the additional grant funds as the beginning ofa 20-year grant obligation period based onthe City's acceptance. Interpretation ofthe Grant Assurances The City argues that the plain language ofthe grant supports its pnsition and that ifthere is any ambiguity the rule of

### contraproferentem applies. Federal grants, however, are a hybrid- partly a contract in terms ofvoluntary offer, acceptance and consideration, andpartly a creature ofstatute in terms ofthe conditions imposed byCongress in exchange for the funds. In 

### Bennett v. Kentucky Departmentof Education, 470 U.S. 656, 669 (1985),the U.S. Supreme Court expressly addressed this issue. Inthat case it was argued thatthe contractual aspects ofFederal grants meant that the doctrine of

### contraprojerentem should apply to resolve any ambiguities. The Court heldthat as grants originate in and are governed byFederal statutes, the rules governing statutory interpretation apply. Consistent with this opinion, subsequent courts have held that FAA is entitled to deference in interpreting the 1,rrant assurance obligations. 

### In

### BMISalvage Corp. v. 

### FederalAviation Administration, Miami-Dade County, Florida, U.S. 

### Court of**AppeaL~** 

### IF" CircuitNo. 11-12583, (July 19, 2012), the court found "[b]ecausethe FAA's interpretation is not plainly erroneous or inconsistent with the statute, we conclude that the FAA's tlnding that demolition is nonaeronautical is entitled to deference." Under the plain language ofassurance (B)(1 ), the not-to-exceed date is linkedto 

### "a offer" and not limited to the 

### original offer. With the work for which the grant funds were originally provided completed, and the grant itselfclosed, additional consideration was needed for the additional funding. General reference to the additional consideration was in the language ofthe

14 California Attorney General Opinion, CV 74-317 (May 30, I975); Opinion ofthe City Attorney (Jan. 23, 1962). 

### 18Case: 16-72827, 0812512016, ID: 10100384, 49 55

second amendment--FAA "has determined it to be 

### inthe interest ofthe United States" and that the second amendmentwas entered into "inconsideration ofthe benefits to accrue to
... [both] parties
...." That consideration was, as it usually is for grants, agreement by the grantrecipient to be bound bythe statutory grant covenants. The applicable assurance at issue continues until throughout the useful life ofthe project but no laterthan 20 years from the date ofthat acceptance, August27, 2003. The Director's finding here yields a reasonable outcome and is consistent with Congressional intent in establishing the AlP. The grant assurances arc designed to assure that FAA and the public receive a benefit in return for the Federal investment. Assurance (13)(1) reflects t11e FAA's expectation that the benefit to the public extends, in general, for approximately 20 years. In this matter, the usefu1life would be longer, butthe grant assurance is not to exceed 20 years from acceptance ofthe new grant funds. The continued applicability ofthe relevant grant assurances until August 27,2023, is consistentwith the useful life ofthe project and the public benefit resulting from the project. Under the City's approach, the applicable grant assurances would have expired in 2014, yielding only 12 years ofuse and benefit from the improvements that were completed in 2002; a result at odds with the conditions, intent and purpose ofthe FAA's grant program. All other arguments made by the City have been considered and are not supported by the law or the facts. 

### VII. Findings and Conclusions Uponconsideration ofthe submissions ofthe parties, the entire record herein, the applicable law and policy, the Director, Airport ofCompliance and Management Analysis, finds and concludes that the City remains obligated bythe grant assurances until August 27, 2023. This finding is based on the acceptance ofAmendment No.2 onAugust 27, 2003, resulting in additional AlP funds provided to the City. This acceptance ofFAA offer ofadditional grant funds, after the project had been completed, triggers the grant assurance under (13)(1) to remain in force for 20 years from August 27, 2003. 

### ORDER ACCORDINGLY, the Director finds that the Respondent City ofSanta Monica remains obligated by the grant assurances until August 27, 2023.

19ID: 10100384, DktEntry: 1-5, 50 55

RIGHT OF APPEAL This Director's Determination is an initial agency determination and docs not constitute final agency action and order subject tojudicial review. [14 CFR 16.247(b)(2)] A party to tlus Complaint adversely afTected by the Director's Detennination may appeal the initial determination to FAA Associate Administrator for Airports pursuant to 14 CPR 16.33(b) within thirty (30) days after service oftbe Director's Determination.



### /fi--frrn~n~{."fl~fi~;~'-;

**£·A~ting** Director, Office 'c1Ximo1t Compliance and Management Analysis 

### I

20

### Page 51 55



### INDEX OFADMINISTRATIVE RECORD

National Business Aircraft Association, KruegerAviation, inc., Harrison Ford, .Justice 

### Aviation, Kim 

### Davidson Aviation, Inc., Aero Film, Youri Bujko, JamesRoss, Paramount 

### Citrus LLC and AircraftOwners and Pilots AssociationComplainants 

# v. City ofSanta Monica, California Respondent
Docket No. 16-14-04 

### EXHIBIT l Item 1- Pa1i 16 Complaint, dated July 

### 2, 2014. exhibit! -City ofSanta Monica Inter-Deprutmcnt Memo dated January 23, 1962 exhibit 2- Office ofthe Attorney General ofthe State ofCalifornia, Opinion No. CV 74-317, dated May 30, 1975 exhibit 3- City Council Meeting, dated June 23, 1981, Resolution No. 6296 exhibit 4- Newspaper article titled 

### "Cily rescinds eviction notices to airport firms", undated exhibit 5- Santa Monica Airport Agreement, dated January 31, 1984 exhibit 6 -City Council Report, City Council Meeting, March 25, 2014 exhibit 7 ""City ofSantaMonica Regular City Council Meeting Agenda, March 25,2014 exhibit 8- United States Court ofAppeals for the District ofColumbia Circuit, The City ofSanta Monica, Petitioner, v. Federal Aviation Administration, Respondent; Final Brief ofPetitioner City ofSanta Monica, dated August 31,2010

21ID: 10100384, DktEntry: l-5, 

### 52 of

exhibit 9- United States District Court Central District ofCalifornia, City ofSanta Monica, Plaintiff, v. United States ofAmerica, Federal Aviation Administration and Michael P. Huerta, in oi1icial Capacity as Administrator ofFederal Aviation Administration, Defendants; Complainant for Declaratory ReliefUnderthe Quiet Title Act and United States Constitution, dated October 31, 2013 exhibit I0 -United States District Court Central District ofCalifornia, City ofSanta Monica,**PlaintiH~** v. United States ofAmerica, Federal AviationAdministration and Micha.el P. Huerta, in ofticial Capacity as Administrator ofthe Federal Aviation Administration, Defendants; Joint Rule 

### 26 Report ofEarly Meeting ofCounsel Dated January 16, 2014 exhibit 

### 1l ·-Letter from Richard 

### K. Simon 

### to Santa Ofticials, Rod Gould City Manager, Marsha Moultrie City Attorney, Ste1ios Makrides Airport Manager, dated June 11, 2014 exhibit 12- Letter from Ivan 0. Campbell, Deputy City Attorney, for Santa Monica, to Richard 

### K. Simon, dated June 

### 23, 2014 exhibit 

### 13- Letter from StevenJ. Brown, NBAA ChiefOperating Officerto The Honorable Pam O'Connor, Mayor, City ofSanta Monica, dated March 24, 2014. 

### Item 2**···~Notice** ofDocketing dated July 17, 2014. 

### Hem 3 --City ofSanta Monica, Motion to Dismiss the Part 

### I 6 Complaint 

### ofNational Business Aircraft Association, 

### ET AL; Memorandum ofPoints and Authorities in Support Thereof [Pursuant to 14 CFR. §16.25(a)(b), dated, August 14, 2014]. Includes Exhibits (A) Grant Agreement, Part V, Assurances, (B) Amendments 1 and 2, and (C) August 12,2014, Saota Monica Council Meeting, Agenda Hem 8-A.

15 AlP exhibit A- Federal Aviation Administration, Grant Agreement, Part 

### I Offer, to the City 

### of SantaMonica, California, Sponsor dated June 27, l994,AIP 15ProjectNo. 3-06-0239-06, Contract No. DTFAOS-94-C-20857, to the City ofSanta Monica, Califomia, Sponsor. 1. Part 1!-Acceptance date June 29, 1994 (pageS), signed by officials for the City ofSantaMonica 2. Application for Federal Assistance submitted June 15, 1994, by the City of SantaMonica. 

### 3. Part

### V ofthe Application for Federal Assistance, the Assurances, Dated October 

### I , 1990 exhibitB- Amendment No. I to Grant Agreement for Project No. 3-06-0239-06, dated November 8, 1999. Amendment No.2to Grant Agreement for Project No. 3-06-0239- 06, dated August 27, 2003

22Case: 16· Page of

exhibit C- City Council Report, City Council Meeting, August 12,2014, Agenda Item 8- A, and attestation ofVernice Hankins, City Clerk's Office, that the StaffReport is a true and correct copy ofthe StaffReport Item 8-A. 

### Item 4- Answer

### ofthe Complainants to Respondent's Motion to Dismiss, docketed August 

### 28, 2014. 

### ItemS- City ofSantaMonica's Answer to Complaint, dated and SupportingExhibits dated October 20, 2014. exhibit 1-- Federal. Aviation Administration, Grant Agreement, PartI OtTer, to the City ofSanta Monica, California, Sponsor dated June 27, 1994. AlP Project No. 3-06-0239- 06, Contract No. DTFAOS-94-C-20857, to the City ofSantaMonica, Califomia, Sponsor.

a. Part ll-Acceptance date June 29, 1994 (page 5), signed by officials for the City ofSanta Monica. b. Application for Federal Assistance submitted June 15, 1994, by the City of Santa Monica, c. Part V ofthe Application for Federal Assistance, the Assurances, Dated October 1, 1990. d. Current FAA Advisory Circulars for AlP Projects, effective June 

### I, 1994. exhibit 2- AmendmentNo. 

### I to Grant Agreement for Project No. 3-06-0239-06, dated November 8, 1999. AmendmentNo, 2 to Grant Agreement for Project No. 3-06-0239- 06, dated August 27, 2003. exhibit 

### 3 City Council Report, City Council Meeting, August 12,2014, Agenda Item 8-A, and attestation ofa City Clerk's Office, that the StaffReport is a true an correct copy of the StafJReport Item 8-A. exhibit 4- Letter from the Manager ofthe City ofSanta Monicato the FAA Airports Program Engineer regarding SantaMonica Airport Grant Amendment tor Project No.3- 06-0239-06 (I!),with attachment 

### I dated September 27, 2002. 

### Item 6

- Reply ofthe Complainants to the Respondent's Answer to the Complaint docketed October 30,2014. 

### Item 7- City ofSanta Monica's Rebuttal to the Reply BriefofComplaints, docketed November 13, 2014. 

### Item 8- The FAA's Request for Additional Information, dated February 19, 2015. 

### Item 9- Complainant's Response to the request for additional information, dated March 25, 2015.

23**16~** Page 54 of 55



### Item 

### 10- City ofSanta Monica's Response to FAA's Request for Additional Information Declaration, with Exhibit, date April!, 2016. l.tem 11 -Letterfrom the City to FAA requesting the Grant be reopened and to award additional grant money, dated May 7, 2003. Item 12- Letter rrorn FAA to the City agreeing to reopen grant and disburse additional grant money, undated copy. Item 13

- Final Construction Report, Airport Improvements, Santa Monica Airport, AlP Project No.3-06-0239-06 (!!). 

### Item 14- Letter from the City requesting Amendment No. 1to the grant dated August 2, 1999. Item 15

- Santa Monica Airport, Airport Master Record, 501 0. Item 16- Dated August 6, 2015, Notice of Extension ofTime to issue the Director's Determination to August 21,2015. Item 17 -Dated August 2I, 2015, Notice ofExtension ofTime to issue the Director's Determination to September 21, 2015. Item 18 ·Dated September 21, 2015, Notice ofExtension ofTime to issue the Director's Determination to October 15, 2015. Hem 19

- Dated October 16, 2015, Notice ofExtension ofTime to issue the Director's Determination to December 4, 2015.



### 24ID: 10100384, DktEntry: Page of 55



### CERTIFICATE OF SERVICE I hereby certify that I filed the foregoing with the Clerk ofthe Court for the United States Court of Appeals for the Ninth Circuit via by using the appellate CM/ECF system on August 25, 2016. I certify that one copy of the foregoing was served via hand delivery on August 25, 2016 on each ofthe following: Michael P. Huerta Administrator Federal Aviation Administration 800 Independence Avenue, SW Washington, D.C. 20591 Assistant ChiefCounsel Office ofthe ChiefCounsel Federal Aviation Administration 800 Independence Avenue, SW Washington, D.C. 20591 I eetiify that one copy ofthe foregoing was served via UPS overnight mail

on August 25, 2016 on: Richard K. Simon 1700 Decker School Lane Malibu, CA 90265
Dated: August 25, 2016

sf-3684576 

## Is/Deanne E. Maynard Deanne E. Maynard